Comments on: 2010 Roth IRA Conversion Rules

By: Michael

Michael — Mon, 16 Aug 2010 14:41:56 +0000

Does an operating loss carryforward in excess of the conversion amount mean that no tax would be due on a Roth conversion???

By: JoeTaxpayer

JoeTaxpayer — Mon, 28 Jun 2010 15:25:44 +0000

If you choose to spread over the two tax years, ’11 and ’12, the income is added to your taxable ’11 and ’12 income and the rates for each year are applicable.
The ability to defer the tax is a mixed blessing. You delay payment of course, and the time value of that money working in your favor, but you (a) run the risk of higher rates in effect
(b) an unexpected higher income – I was the beneficiary of a corporate buy out, and one year had unexpected incomes that blew our marginal bracket two levels above what I’d have planned. No sympathy, but an example of unexpected consequences.
(c) loss of ability to recharacterize if investment drops

By: Joe King

Joe King — Mon, 28 Jun 2010 14:26:32 +0000

What tax rates are used for a 2010 conversion? Is it locked at the 2010 rate or could the tax rate go up in 2011 and 2012?

By: JoeTaxpayer

JoeTaxpayer — Fri, 23 Apr 2010 03:03:37 +0000

You can do it prior in terms of time, but you must do the RMD math before the conversion. In other words, the 2010 RMD is based on the ’09 year end balance, and you need to be sure that amount is withdrawn by the end of this year.

By: NORMAN SPECTOR

NORMAN SPECTOR — Thu, 22 Apr 2010 20:15:35 +0000

CAN I CONVERT AN IRA TO A ROTH PRIOR TO AN RMD IF THERE ARE ENOUGH FUNDS FOR THE RMD?

By: Friday Tax Tip Findings From Around the Financial Blogosphere | Tax Debt Weblog

Sat, 27 Feb 2010 18:30:22 +0000

[...] 2010 Roth IRS Conversion Rules: A great essay about Roth IRS acclimatisation rules. People can modify their normal IRS’s, SEP IRA’s, Simple IRA’s, aged 401K’s, aged 403b’s in to a taxation giveaway Roth IRS account. [...]

By: * Tax Tips for 2009 Tax Year

* Tax Tips for 2009 Tax Year — Mon, 01 Feb 2010 13:02:21 +0000

[...] 2010 Roth IRA Conversion Rules, Bible Money Matters — A look at the 2010 Roth IRA conversion event, and why it might be a good idea for you to take part (or why not). [...]

By: Kevin@OutOfYourRut

Kevin@OutOfYourRut — Mon, 25 Jan 2010 16:21:37 +0000

I like the idea of having some money in the Roth just in case it's needed for living expenses, then at least there'll be no tax on the contribution portion. The problem I have stems from the same issue, if it's less expensive to withdraw funds, we might be tempted to do just that. The purpose of tax sheltered plans is retirement, and for that reason alone it may be worth it to keep the funds as far away from us as possible. Back in the days of employer managed defined benefits plans workers could build up money they never knew about and when they retired, it was there waiting for them. We have to come as close to that arrangement with self-directed plans as possible. Kevin@OutOfYourRut´s last post ..Buying vs Renting a Home – Its Not All About Money

By: otcbb

otcbb — Sun, 24 Jan 2010 19:02:35 +0000

Taxes, taxes, taxes.

Something worth looking at but you better be sure its the right decision.
otcbb´s last post ..OTCBB STOCK

By: JoeTaxpayer

JoeTaxpayer — Sun, 24 Jan 2010 16:15:55 +0000

In a word, no. I'm part of the dialog at Sam's site you linked to. The tough part of this conversation is that there are so many variables to ponder. Too many posts ignore the dry, boring math which needs to be at least touched on to analyze one's own situation. For a couple today to retire and be at the top of the 15% bracket, they would need $86,700 taxable income. This translates to over $2 million in pretax accounts to withdraw this number. This alone is enough to suggest that if one is in the 25% bracket today, they'd need a huge next egg, pretax, to risk retiring in even the same bracket. Sorry, this is a soapbox topic for me, I'll close with this thought. All data points towards low savings rates, the risk that few are ready for retirement as they approach 60, etc. The number today that seem to be near that magic $2M at retirement is pitiful, today, less than 5%. Remember, even a high wage earner can only pack so much into pretax accounts. JoeTaxpayer´s last post ..A Roth Roundup