What is the 2010 IRS Rule and how you can prepare in 2009
While 2010 is still a year away, you may be wondering – "Is anything I can do in 2009 if I plan to convert an existing retirement account to a Roth in 2010?"
You can and there are 2 easy steps:
- Contribute as much as you can to your existing accounts now in preparation for 2010.
- Consult with a professional on all your options as each financial situation is unique.
When 2010 arrives, you'll have a large nest egg that can begin realizing Roth IRA advantages.
Important Tax Considerations for the 2010 IRS Rule
Keep in mind that when converting to a Roth IRA, you will owe taxes and that if you have several retirement accounts, additional taxes could apply.
The good news is that under the new 2010 IRS rule, if you convert an existing retirement account to a Roth IRA, in 2010 only, you can split the converted income amount between 2011 and 2012, which means that you would not pay any taxes in 2010 on the amount converted.
Timing is everything – opportunity may not last forever
While, according to the IRS, there is no deadline by which you must convert your retirement accounts in order to take advantage of the suspended income restrictions, some speculate that the opportunity will not exist indefinitely, and possibly may go away sooner than later.
For more information on things to consider regarding the 2010 Roth conversion, call an Equity Trust Retirement Specialist at 1-888-382-4727.
Disclaimer: Before converting an existing retirement account, be sure to talk with your tax professional to make sure you have a clear understanding of how the tax rules would affect you.
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