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QUESTION:
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Roth IRA changes for 2010 - higher income limits to convert from a tradition to a Roth IRA | On May 17, 2006, President Bush signed a new tax bill into law that makes a number of changes to tax law - this included changes affecting who can participate in a Roth IRA.
With the new law more people can participate in a Roth IRA. A Roth IRA, unlike a traditional IRA, doesn't provide tax deduction when you invest your money, but your original deposits and the earnings on them are not taxed when you withdraw money in retirement.
Until this new tax law change - not everyone could participate in a Roth IRA — currently individuals with incomes of more than $110,000 and couples with more than $160,000 aren't allowed to put money into a Roth IRA, and households with income of more than $100,000 are not able to convert a traditional IRA into a Roth IRA.
With the new law that goes into affect in 2010 - people with incomes of more than $100,000 to convert a traditional IRA into a Roth IRA. People will have to pay taxes on the conversion, if you convert in 2010, you can split the taxes into two payments to be paid in 2011 and 2012. If you convert after 2010, you will have to pay the taxes in one year.
However - the income threshold for people who are starting a new Roth IRA doesn't change. |  | asked by SF Low Risk, 6/4/2006 |
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Categories:
Asset Protection, Reducing Retirement Expenses, Financial Planning for Retirement, Pre Retirement, IRAs, Tax Planning
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