Recall the special rule, beginning with the 2010 tax year, which allowed taxpayers to convert a traditional IRA to a Roth IRA regardless of his or her adjusted gross income. And along with that rule came a provision which allows taxpayers to change their mind if they took this action in 2010 and now wish they hadn’t.

Let’s say you converted $100,000 and now, because of a “sideways” stock market and/or just poor investment performance during the interim, your account balance is now worth $50,000, with little or no hope for a near term recovery. You may not think, now, that the tax you paid on the original $100,000 conversion was such a good deal.

So, the “good news” is that you can now undo all or a part of the conversion by orchestrating a trustee-to-trustee transfer of the funds from the Roth IRA back to a traditional IRA if you act no later than the due date, including the six month extension period (to October 17, 2011) which will be upon us very soon. Technically, taking this action now is referred to as a “recharacterization.” And upon its completion, the tax impact of the original conversion can be avoided.

The “recharacterization” can result from unwinding all or only a portion of the original conversion — at the taxpayer’s option. This entails pushing a pencil, and making some assumptions regarding the longer term impact on your overall wealth picture. Also don’t forget that any “recharacterization” amount must include any earnings (dividends or interest) earned since the time of the original conversion. (Learn more about Taxes and Retirement Planning.)