Background of the question: Trying to help a family member they want to rollover and convert to Roth by end of year. Fidelity said to rollover to a rollover traditional first rather than straight to Roth. I’m not sure why Fidelity told me so strongly NOT to rollover directly to Roth… Timing is getting tight now (current custodian said “up to 2 weeks”), relative has finally decided to go through with conversion. Hopefully tomorrow… Only so much nudging one can do . Their 401k administrator only allows rollovers by phone and only during weekday business hours.
I have seen that if you do a conversion or rollover, the withdrawal date determines the tax year and not the date it’s received in the new account. If the custodian withdraws but drag feet and it doesn’t get to the IRA in time, then it possibly wouldn’t get converted to roth by Dec 31. So, I am wondering if that happens if the rollover can be recharacterized to Roth, because that is allowed through Oct 15.
Meat of the question:
I can only find reference on IRS site for 401k Rollover Roth -> Traditional recharacterization (such as here: https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras-recharacterization-of-roth-rollovers-and-conversions), and nothing about recharacterizing a 401k Rollover traditional TO roth, or even about recharacterizing a regular contribution to a traditional IRA into a Roth IRA.
I have found other references from google that you can also re characterize from Roth to Traditional, but nothing about rollovers specifically. Example is here: https://www.investopedia.com/terms/r/recharacterization.asp?lgl=rira-related-content-baseline
Can you recharacterize from traditional TO roth as easily as from Roth TO traditional? It seems like it should be easier, because all of it’s taxed rather than treating the gains and contributions differently when going the other way.