Equity Trust News Alert: Bush Signs Bill to Relax Roth Eligibility Rules
New Rule Allows Every American to Convert to a Roth IRA Regardless of Their Income---Doesn't Take Effect Until 2010
May 19, 2006—Cleveland, Ohio—President George W. Bush signed a new tax-cut bill on Wednesday, April 17th that allows anyone with a Traditional IRA, even high-income taxpayers, to covert their IRA into a Roth IRA, which allows tax-free withdrawals. But taxpayers are not eligible for income limit-free IRA conversions until 2010.
Roth IRA benefits include completely tax-free distributions if the account has been established for five years and the account holder has reached 59 ½ years old. To convert to a Roth IRA Americans must currently fall below $100,000 Modified Adjusted Gross Income (MAGI).
The new tax bill will suspend the current $100,000 MAGI income limit for Roth conversions for two years beginning in 2010. After an initial tax payment when converting, Roth IRA holders would benefit with considerable tax savings in later years when making withdrawals.
In addition, included in the tax bill is a provision that will ease the tax hit on IRA conversions. If taxpayers convert their IRA to a Roth in 2010, they won't have to pay any taxes on the conversion that year. Taxpayers will be allowed to pay half their tax bill in 2011, the other half in 2012.
We will keep updated on the latest Roth IRA information and help prepare you for conversion in 2010.
About Equity Trust Company
With more than 32 years experience and management of $2 billion in IRA assets, Equity Trust Company is a leading custodial provider of self-directed IRAs and small business retirement plans, allowing clients to increase financial wealth by investing in variety of opportunities from real estate and private placements to stocks and bonds. Clients benefit from our extensive expertise and exceptional service, including: personalized account management team for every client, including their own 800 number; fast and accurate processing (90% of transactions reviewed in 24 hrs); and access to accounts and online bill-pay with the industry’s first online account management tool, eVANTAGE.