For taxpayers that converted a traditional IRA to a Roth IRA in 2007, October 15 is the last chance they have for redemption, according to Mike Martin of Mike Martin and Associates.

“If market forces have driven down the value of their IRA, they have until the stroke of midnight for a do-over,” said Martin.

“You convert it back to a traditional IRA by Oct. 15, and then amend your return and get back the tax you paid on it,” he said.

“It is an almost certainty that the value of that converted IRA is far lower than it was when the conversion was made,” Martin added. “The opportunity to undo the conversion and recoup the paid taxes is quite compelling, particularly for those approaching retirement. On a $500,000 conversion for someone in the highest tax bracket, the move could put approximately $25,000 back into the pocket of the investor—even if they chose to re-convert to a Roth IRA in the future.” 

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