SS+D FINANCIAL NEWS AND INFORMATION

August 23, 2010

ROTH IRA CONVERSIONS

In 2010, the $100,000 modified adjusted gross income limit for Roth IRA conversions has been eliminated.  If converted in 2010, any income reported as a result of the conversion can be spread over 2011 and 2012.  This may prevent a tax bracket increase and may lessen and defer the initial tax liability.

In general, a Roth IRA conversion makes most sense when:

• A higher tax rate is expected at the time funds are to be withdrawn;
• A partial conversion provides tax-diversity benefits;
• There is going to be  long time, thirty years or more, for the converted funds to grow inside the Roth;
• Front end conversion tax payments do not come from the converted IRA;
• The Roth IRA is going to be given to children or grandchildren.

Economics are dependent on each investor’s unique situation.

If you are interested, please contact us for a more detailed review.