The election to recharacterize an IRA contribution can be made by the executor, administrator, or other person responsible for filing the decedent's final income tax return. The recharacterization mechanism also allows an executor to turn the decedent's contribution to a traditional IRA into a Roth IRA contribution. The taxpayer can then reconvert the traditional IRA to a Roth IRA, within specified limits. The final regulations prescribe new limits and conditions for post-1999 reconversions. The new rules are more restrictive than the rules that applied to 1998 and 1999 reconversions.
Final regulations explain FICA tax consequences of nonqualified deferred compensation plans.
The IRS has issued final regulations explaining the FICA tax treatment of nonqualified deferred compensation plans. Wages usually are subject to FICA tax when actually paid. This special FICA rule can produce beneficial results when there are no forfeiture provisions in a nonqualified deferred compensation plan. The amount is deferred and payable when the employee retires at age 65. This assumes the employee won't have wage or self-employment income after retirement.