A unique opportunity looms large in 2010 to convert from traditional IRA's or other qualified pension plans into Roth IRA's (Photo: Sen. William Roth - R Delaware).
Why is 2010 so great?
Why is 2010 so great?
- The $100,000 income cap will be gone. Anyone can convert.
- Ordinary income recognized from the conversion can be deferred to 2011 and 2012 (1/2 in each year).
Why do I want a Roth IRA instead of a traditional IRA or pension plan?
- Although you pay taxes now, distributions are tax FREE after five years and you reach the age of 59 1/2.
- You are not required to take "required minimum distributions" during your lifetime.
When does it make sense to do this?
- You have a number of years before retirement so that income can compound tax-free.
- You anticipate being taxed at a higher rate in the future than you are now.
- You have the resources to pay the taxes due on the conversion from non-retirement assets.
Savage Esplin & Radmall can help you decide whether this will be a good choice for you.
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