[11017]
May 27, 1999
TO: PENSION COMMITTEE No. 35-99
PENSION OPERATIONS ADVISORY COMMITTEE No. 32-99
RE: IRS RELEASES GUIDANCE ON AUTOMATIC EXTENSION FOR
RECHARACTERIZATIONS
______________________________________________________________________________
The Internal Revenue Service has released Announcement 99-57, which provides that taxpayers
who have filed their returns in a timely manner (i.e., by April 15) may still file an election to
recharacterize Roth IRA conversions. Announcement 99-57 states that regulation section 301.9100-2(b)
provides for an automatic extension of six months from the due date of the return, excluding extensions,
to make elections that otherwise must be made by a return’s due date. Therefore, taxpayers who filed
their returns by April 15, 1999 may still elect to recharacterize 1998 Roth IRA contributions and
conversions on or before October 15, 1999.
Section 301.9100-2(b) of the regulations generally provides for an automatic extension of 6
months from the due date of a return, excluding extensions, to make elections that otherwise must be
made by the due date of the return or the due date of the return plus extensions, provided (1) the
taxpayer’s return was timely filed for the year the election should have been made, and (2) the taxpayer
takes appropriate corrective action within this 6-month period. Announcement 99-57 states that in the
case of a calendar-year-basis taxpayer who has timely filed his or her 1998 Federal income tax return, he
or she can elect to recharacterize a 1998 IRA contribution, including a Roth IRA conversion for which
the taxpayer was not eligible, provided the appropriate corrective action, i.e., the recharacterization
election, occurs on or before October 15, 1999.
However, the Service may invalidate a recharacterization election that is not properly reflected
on the taxpayer’s 1998 return. Therefore, a taxpayer who did not reflect the recharacterization election
on his or her filed returns and who intends to take advantage of the automatic extension under section
301.9100-2(b) of the regulations, must timely file an amended 1998 return that properly reflects the
recharacterization. The amended return is not due by October 15, 1999, but must be filed by the normal
deadline for amended returns.
A copy of Announcement 99-57 is attached.
Kathryn A. Ricard
Assistant Counsel
Attachment