Suppose you converted a traditional IRA to a Roth IRA only to see the value of the assets decline significantly. So you "recharacterized" the Roth into a traditional IRA before the tax return deadline. But now the market has shifted again and the assets are making a comeback. Can you pull another switcheroo and shift back to the Roth?

The short answer is "yes," as long as you meet the timing requirements for the change—a "reconversion" in tax parlance.

Don't confuse a reconversion with a recharacterization. The latter is the process of redesignating a Roth IRA as a traditional IRA following a conversion. It's as if the conversion never occurred. The deadline for a recharacterization is your tax return due date for the year of the conversion plus any extensions.

For instance, assume you convert assets in a traditional IRA to a Roth early in 2018. That means you have until October 15, 2019—the extended due date for filing 2018 returns—to recharacterize. And there's no restriction on how soon after the conversion that a recharacterization can occur. It might even be the next day if you suddenly change your mind.

But there's not as much flexibility with a reconversion. The earliest date you can reconvert is the latter of (1) the beginning of the tax year following the tax year of the conversion and (2) the end of a 30-day period beginning on the day of the recharacterization. After that date, you can reconvert at any time, and the event will be treated like a first-time conversion.

Let's say you convert stock in a traditional IRA that was valued at $100,000 to a Roth on May 1, 2018. But then the stock loses 25% of its value. When you file your 2018 return, you'll have to pay tax on the full $100,000. In a 39.6% bracket, that will cost you $39,600 (a lot more than the $29,700 you would owe based on its current $75,000 value).

Because of the decline, you recharacterize your Roth as a traditional IRA on July 1, 2018—and thus avoid any tax on the conversion. But then the stock starts to rebound and now it's worth $110,000. Under the rules for reconversions, the earliest date you can reconvert to a Roth is January 1, 2019 (which is later than the end of the 30-day period after the recharacterization).

Due to these timing restrictions, you might choose to wait until late in the year to recharacterize a Roth that has declined in value. That will give you greater flexibility over the earliest reconversion date.

Finally, note that these rules apply only to amounts that actually were converted. If you don't convert an entire IRA, you'll have more control over any recharacterization or reconversion.