March 29, 2018
A Traditional IRA can be converted to a Roth IRA. The best way to do this is a “Direct Rollover” (which most of us might call a Trustee to Trustee transfer), but the idea is simply have the IRA account moved (even if with the same custodian) to a Roth IRA account. This constitutes a taxable event (so you need to have cash ready to pay the tax), but there is no mandatory withholding, which can badly compromise the efficacy of the conversion.
The law has always permitted a taxpayer to change his or her mind about the conversion by the due date for filing the tax return (with extension). So, if I converted an IRA to a Roth IRA on June 1, 2014, I had until October 15, 2015 to “recharacterize” the conversion so that my new IRA was just a Traditional IRA.
The December 2017 Tax Act eliminated the ability to recharacterize a conversion from a Traditional IRA to a Roth IRA “effective in 2018.” No one knew if that meant “no recharacterizations of conversions that occurred in 2018 and later” or if it meant “no recharacterizations in 2018 and later”. If the latter, this would be manifestly unfair to those who had converted in 2017 with the understanding that a recharacterization was an option up to October 15, 2018.
This IRS agrees, and has announced to the public that conversions to Roth IRAs in 2017 may be recharacterized up to October 15, 2018. See https://www.irs.gov/retirement-plans/ira-faqs-recharacterization-of-ira-contributions. Note that this announcement is not law, and practitioners await a pronouncement (such as an IRS Revenue Procedure) that can be relied upon.