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ROTH Conversion » From: Amherst, MA Dear TaxMama: In 1988 I converted a ROTH IRA in a mutual fund, and over the past 4 years I have paid tax on the conversion. The ROTH is now worth half of what it was. Can I sell this fund and take any sort of a tax loss, and are there any other ramifications that I need to know about? Thanks for your help. Michael Dear Michael, You're in the same boat with a great many other people. We had a similar question last month that I posed to my Pro team. "Your reader could have recharacterized his conversion back to a traditional IRA in 1998 or 1999, but the time has long passed for that. I don't know of any way to forego the tax on this one." In other words, you might have been able to fix this problem and adjust some or all of it back to an IRA - but you had to do that a couple of years ago. There aren't any current ways to fix this that I know of. So sorry. When you cash it out, you won't get any benefits. But, you might still face the additional insult of penalties if you haven't held the ROTH for 5 years and are over 59 1/2. So, please be careful. Seeing this as a potential problem AND hating to pay any kinds of taxes in advance, I managed to convince 98% of my client base not to convert their IRAs to ROTH IRAs. Of the few that did, only one hasn't been hurt by it. He put the money into something conservative that held its value. Best wishes, Eva Rosenberg Your TaxMama

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