Yes, conversions from regular (traditional) tax-deferred individual
retirement accounts (IRAs) to Roth IRAs are still allowed after
enactment of the Tax Cuts and Jobs Act. In fact, in some instances, such
Roth conversions are more beneficial than they were prior to 2018,
since the tax rates on all income, including conversion income, are now
lower. However, the special rule that allows a contribution to one type
of an IRA to be recharacterized as a contribution to the other type of
IRA will no longer apply to a conversion contribution to a Roth IRA
Note, however, that recharacterization is still permitted with respect to other contributions. For example, an individual may make a contribution for a year to a Roth IRA and, before the due date for the individual’s income tax return for that year, recharacterize it as a contribution to a traditional IRA. The provision is effective for tax years beginning after December 31, 2017.
Comment. Earlier versions of the Tax Cut and Jobs Act enacted by both the House and Senate eliminated recharacterization entirely. The provision was narrowed considerably in the reconciled version to target only conversions to Roth IRAs. So, for example, an individual may still make a contribution for a year to a Roth IRA and, before the due date for the individual’s income tax return for that year, recharacterize it as a contribution to a traditional IRA. In addition, an individual may still make a contribution to a traditional IRA and convert the traditional IRA to a Roth IRA, but the individual is precluded from later unwinding the conversion through a recharacterization.