FEATURED INVESTMENT NEWS

2010 Roth IRA Conversions

Did you know that in 2010 everyone will have the opportunity to convert their traditional IRA to a Roth IRA?

Since 1997, there have been income limitations on converting from a traditional IRA to a Roth IRA.  Additionally, if you earned more than $110,000 per year or $160,000 if filing jointly, then you weren’t eligible to contribute to a Roth IRA.

In 2006, President George W. Bush signed a tax cut bill into law that changes the eligibility rules for Roth IRA conversions.  As a result, effective January 1, 2010, all taxpayers will be allowed to convert a traditional IRA into a Roth IRA regardless of income.  Income taxes due on conversions done in 2010 can be spread over two years (2010 & 2011) thus significantly mitigating the tax sting resulting from any conversion.

These rule changes currently apply to all future years as well.  However, Congress and the White House could always revise these changes.  That is why it is important that you contact your IAA Advisor right away so that he can work with you and help you determine if converting your traditional IRA into a Roth IRA makes sense for you in 2010.

This information is not intended to be legal or tax advice. Please consult a tax, legal, or financial professional with questions.