This Article is designed to be of general interest. The specific techniques and information discussed may not apply to you. Before acting on any matter contained herein, you should consult with your personal legal adviser.

If you roll your regular IRA into a Roth IRA, you pay Federal and State tax on the value of the IRA on the date of conversion.

If the IRA value has dropped, you may undo the conversion, and then immediately re-convert at the new lower value, paying tax on only the lower amount.

Assume you converted an IRA into a Roth IRA in January, 1998, when the IRA was worth $90,000. After the recent wild stock market ride, it is now down to $50,000.

• If you leave it alone, you must pay Federal and California income tax on $90,000.
• If you undo the conversion, and then convert again, you will owe Federal and California income tax on $50,000.