Last Day to Undo Roth IRA Conversions

BOSTON (TheStreet) -- Today is a big day for those scrambling to put some crucial financial affairs in order.

Oct. 15 is the deadline to file income tax returns if you requested an extension. For those with the trickier prospect of overseas assets, today is also the last chance to report undeclared holdings in foreign banks as part of the government's amnesty program. Failure to do so could result in massive fines and even jail time.

As if accountants didn't have enough to do with their procrastinating clients, this is also the annual deadline to undo Roth IRA conversions. If you switched to a Roth in 2008 and wish you hadn't, you can put your money back in a traditional IRA. This maneuver can shrink investors' tax bills and generate interest-paid returns.

Rande Spiegelman, vice president of financial planning at the Charles Schwab's(SCHW Quote) Center for Financial Research, says investors can reverse a conversion for any reason at any time before the deadline.

"You don't need a reason. You don't need an excuse. You don't need a note from your doctor or your mother. You just want to reverse that thing and make it like it never happened," he says. "Maybe you just changed your mind or your original assumptions were wrong."

Many investors opt to "recharacterize" their IRAs because the upfront tax hit of a Roth IRA proved unpalatable. For example, investors in the 30% tax bracket who converted $100,000 might reconsider the change when they find out they owe $30,000 in taxes next year. It would make sense to move back to a traditional IRA if the investor expects to stay at the same tax bracket in 20 or 30 years, Spiegelman says.