

IRA Monte Carlo (hacking the performance of your retirement account) - mshafrir
http://www.businessweek.com/magazine/content/11_16/b4224052439122.htm

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Here's a more detailed version of the example:

1\. Single IRA ABCD worth $4 million dollars 2\. IRA ABCD split into 4 1
million dollar IRAs: IRA A, IRA B, IRA C, IRA D

3\. Investor converts IRA A, IRA B, IRA C, and IRA D to Roth IRAs in January
2012 (conversion counts again 2012 taxes)

4\. Before April 15 2013, investor extends their tax return to October 15 2013

5\. In October 2013 investor notices IRA B and IRA C had losses so they decide
to recharacaterize their Roth IRA conversion (undo it)

6\. Investor files their tax return by October 15 and only pays taxes on the
conversion of IRA A and IRA B into Roth IRAs.

I think the "21 months" mentioned in the article is specific to this case. I
believe recharacterization of a Roth conversion must occur before filing taxes
for the conversion. So if the investor converted their traditional IRAs to
Roth IRAs in December 2012, the conversion would count against 2012 taxes and
they would still only have until October 15, 2013 (10 months).

There are multiple potential benefits from this, the most obvious one being
that if the investor then converted IRA B and IRA C to Roth on October 16,
2013 they would owe less taxes since the values of those accounts has gone
down.

