IRA to Roth IRA conversion - can i reverse in same tax year?

Hi, Maybe one for Durhamlad.. I made a conversion from my IRA to my Roth IRA in  Feb 2022. Given i have withdrawn other amounts ( unforecast at the time of the Roth conversion)  from my IRA in 2022 ,the Roth transfer now seems a mistake , tax wise. I would have been better off doing it in 2023. Is there anyway i can reverse the conversion as its still in the same  / current tax year. It's with Vanguard.

Yes, you can undo a Roth conversion in the same tax year.  Definitely worth a quick Google to check this. Vanguard will do all the correct forms for this, and I did something similar in 2010 when I made a Roth contribution then got an unexpected bonus taking me over the contribution limit meaning I had to recharacterize the contribution.

Below is an article from TurboTax on this

https://turbotax.intuit.com/tax-tips/investments-and-taxes/reversing-a-roth-ira-conversion/L0yVOfwyZ

You can reverse a conversion
If the investments in your new Roth IRA lose value after the conversion, you’ll have an adverse tax outcome, because the taxable distribution from the conversion will still be based on the value of the account on the conversion date. In other words, you’ll wind up owing taxes on money you no longer have.

Going back to our example, let’s say the value of the Roth IRA drops from the initial $50,000 to $35,000. You’ll still have a $45,000 taxable distribution from the conversion, even though the Roth account is now worth only $35,000.
Fortunately, you can avoid this unfavorable outcome by reversing the Roth account back to traditional IRA status. The IRS calls this process recharacterizing the account. Once the recharacterization is complete, you’re right back where you started, tax-wise—though your IRA is now worth $35,000 instead of $50,000. To summarize: the conversion is reversed, the $45,000 taxable distribution disappears,(along with the related tax liability), and the account is again a traditional IRA worth $35,000.

Thanks i'll take a look.

This is from the IRS website, looks like the type of transfer i was looking to do is no longer possible. Which is odd as its the same tax year?

[Can I recharacterize a rollover or conversion to a Roth IRA?
Effective January 1, 2018, pursuant to the Tax Cuts and Jobs Act (Pub. L. No. 115-97), a conversion from a traditional IRA, SEP or SIMPLE to a Roth IRA cannot be recharacterized. The new law also prohibits recharacterizing amounts rolled over to a Roth IRA from other retirement plans, such as 401(k) or 403(b) plans.

How does the effective date apply to a Roth IRA conversion made in 2017?
A Roth IRA conversion made in 2017 may be recharacterized as a contribution to a traditional IRA if the recharacterization is made by October 15, 2018. A Roth IRA conversion made on or after January 1, 2018, cannot be recharacterized. For details, see "Recharacterizations" in Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs).

This is from the IRS website, looks like the type of transfer i was looking to do is no longer possible. Which is odd as its the same tax year?

[Can I recharacterize a rollover or conversion to a Roth IRA?
Effective January 1, 2018, pursuant to the Tax Cuts and Jobs Act (Pub. L. No. 115-97), a conversion from a traditional IRA, SEP or SIMPLE to a Roth IRA cannot be recharacterized. The new law also prohibits recharacterizing amounts rolled over to a Roth IRA from other retirement plans, such as 401(k) or 403(b) plans.

How does the effective date apply to a Roth IRA conversion made in 2017?
A Roth IRA conversion made in 2017 may be recharacterized as a contribution to a traditional IRA if the recharacterization is made by October 15, 2018. A Roth IRA conversion made on or after January 1, 2018, cannot be recharacterized. For details, see "Recharacterizations" in Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs).

Sorry about that, I’d forgotten that the law had changed.  What was happening was that many folks were looking at their conversions and contributions at year end and recharacterising them to minimize their taxes or reduce their income to get under ACA subsidy limits, especially after mutual funds had distributed their year end capital gains and dividends which are extremely unpredictable.

Thanks for confirming it to me, that's exactly what i was trying to do. Lesson for me is wait till much later in the year to do the IRA to Roth transfer when i actually know what my total tax liability will be, don't rush to do it! From the 5 year rule viewpoint i belie they always go back to Jan 1 anyway, so there is no impact on eventual withdrawals when its actually done in that year.
Merry Christmas.

Thanks for confirming it to me, that's exactly what i was trying to do. Lesson for me is wait till much later in the year to do the IRA to Roth transfer when i actually know what my total tax liability will be, don't rush to do it! From the 5 year rule viewpoint i belie they always go back to Jan 1 anyway, so there is no impact on eventual withdrawals when its actually done in that year.
Merry Christmas.

Merry Christmas, and good luck going forward with your taxes.