New Roth Conversion Rules for 2010
There are tax implications of converting, but the new rules allow 2010 conversions to spread the tax bite out over years 2011 and 2012. If an individual converts a traditional IRA to a Roth IRA, they must pay federal income taxes on any pre-tax contributions as well as any growth in the value. Keep in mind the tax spread advantage is only for conversions made in 2010. Future conversions must pay the income tax in the year of the conversion. Is a Roth Conversion right for you? Talk to an LSB Investment Representative or try our Roth Conversion Calculator to find out. Before you make a Roth Conversion, it's also important to speak with your tax advisor. |
March 8, 2010 -- Beginning in 2010, the adjusted gross income level of $100,000 became nonexistent for Roth IRA Conversions. This means that higher wage earners now have the opportunity to convert their Traditional IRA into a Roth IRA. The key benefit of a Roth IRA is that it allows for tax-free grow and withdrawals of your money, but there is no tax deduction on contributions as with some Traditional IRAs.
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