2010 traditional to roth ira conversion
Steve K
2007,2008,2009.
I wish to convert this traditional ira to a roth ira in 2010. I have
a few questions:
1) What is the earliest date the conversion can be done ? What is
the deadline date ?
2) Can I also make a traditional ira contribution in 2010 and
immediatly do the roth ira conversion after ( so the 2010 amount would
be included ? )
3) Are we able to do such a conversion in 2011 and later years or is
2010 the only year ?
I'm am above the AGI limits so normally cannot convert to a Roth Ira.
Thanks so much,
Steve.
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Rich Carreiro
> I have made contributions to a traditional ira in the years
> 2007,2008,2009.
>
> I wish to convert this traditional ira to a roth ira in 2010. I have
> a few questions:
>
> 1) What is the earliest date the conversion can be done ? What is
> the deadline date ?
Earliest: 1 January 2010
Deadline: 31 December 2010
> 2) Can I also make a traditional ira contribution in 2010 and
> immediatly do the roth ira conversion after ( so the 2010 amount would
> be included ? )
Yes.
> 3) Are we able to do such a conversion in 2011 and later years or is
> 2010 the only year ?
Under *current law* you can do it in 2010 and any year thereafter.
--
Rich Carreiro rlc-...@rlcarr.com
removep...@yahoo.com
> 2) �Can I also make a traditional ira contribution in 2010 and
> immediatly do the roth ira conversion after ( so the 2010 amount would
> be included ? )
Wouldn't it be simpler to just do the Roth conversion directly?
If you made both deductible and non-deductible contributions to your
traditional IRA's, then the calculation of tax due upon conversion
gets more complicated.
removep...@yahoo.com
> > 2) �Can I also make a traditional ira contribution in 2010 and
> > immediatly do the roth ira conversion after ( so the 2010 amount would
> > be included ? )
>
> Wouldn't it be simpler to just do the Roth conversion directly?
Sorry, typo, I meant Roth *contribution* directly.
Mark Bole
>
>>> 2) Can I also make a traditional ira contribution in 2010 and
>>> immediatly do the roth ira conversion after ( so the 2010 amount would
>>> be included ? )
>> Wouldn't it be simpler to just do the Roth conversion directly?
>
> Sorry, typo, I meant Roth *contribution* directly.
I recall that the removal of AGI-based limits only applies to
conversions, not contributions. So he still cannot make a direct
contribution to a Roth if AGI too high. This approach (Trad. Roth
non-deductible contribution -> Roth conversion) is the only way to do it.
-Mark Bole
Barry Margolin
Mark Bole <ma...@pacbell.net> wrote:
> removep...@yahoo.com wrote:
>
> >
> >>> 2) Can I also make a traditional ira contribution in 2010 and
> >>> immediatly do the roth ira conversion after ( so the 2010 amount would
> >>> be included ? )
> >> Wouldn't it be simpler to just do the Roth conversion directly?
> >
> > Sorry, typo, I meant Roth *contribution* directly.
>
> I recall that the removal of AGI-based limits only applies to
> conversions, not contributions. So he still cannot make a direct
> contribution to a Roth if AGI too high. This approach (Trad. Roth
> non-deductible contribution -> Roth conversion) is the only way to do it.
Pretty silly. So Congress is has effectively removed the AGI limit on
Roth contributions for the year, but you have to do extra paperwork to
take advantage of it.
--
Barry Margolin, bar...@alum.mit.edu
Arlington, MA
*** PLEASE don't copy me on replies, I'll read them in the group ***
Rich Carreiro
>> I recall that the removal of AGI-based limits only applies to
>> conversions, not contributions. So he still cannot make a direct
>> contribution to a Roth if AGI too high. This approach (Trad. Roth
>> non-deductible contribution -> Roth conversion) is the only way to do it.
>
> Pretty silly. So Congress is has effectively removed the AGI limit on
> Roth contributions for the year, but you have to do extra paperwork to
> take advantage of it.
And pay extra tax.
Lets say you have $100,000 of completely pre-tax trad IRA money. You
now make a $5,000 non-deductible trad IRA contribution and then do a
$5,000 trad->Roth conversion.
You will find via Form 8606 that $5000 * ($100,000/$105,000) = $4,762
of the conversion is taxable.
In other words, if your AGI if you had done nothing is I, then your
AGI when doing a $5,000 non-ded trad IRA contribution followed by a
$5,000 conversion would be I+$4,762 which will result in extra tax
relative to doing nothing.
Now, if you're able to make a DEDUCTIBLE trad IRA contribution,
there's no extra tax because while the conversion will now be entirely
taxable -- $5,000 of extra income, the deduction for the contribution
will offset it.
However, currently-employed people who are trying to use this approach
to make a Roth IRA "contribution" are likely unable to make deductible
trad contributions because they are probably in a qualified plan at
work and will have a too-high AGI to be able to deduct a trad IRA
contribution (if their AGI was low enough to deduct the trad
contribution despite being in a qualified plan, their AGI is likely
low enough to just make a direct Roth IRA contribution).
--
Rich Carreiro rlc-...@rlcarr.com
Dan Lanciani
In article <barmar-E3B3F6....@news.eternal-september.org>, bar...@alum.mit.edu (Barry Margolin) writes:
| In article <hg0vse$kfd$1...@news.eternal-september.org>,
| > I recall that the removal of AGI-based limits only applies to
| > conversions, not contributions. So he still cannot make a direct
| > contribution to a Roth if AGI too high. This approach (Trad. Roth
| > non-deductible contribution -> Roth conversion) is the only way to do it.
|
| Pretty silly. So Congress is has effectively removed the AGI limit on
| Roth contributions for the year, but you have to do extra paperwork to
| take advantage of it.
With the conversion your money is tied up for five years if you want to
avoid a penalty where with the contribution it would not be.
Dan Lanciani
ddl@danlan.*com
D. Stussy
news:barmar-E3B3F6....@news.eternal-september.org...
> In article <hg0vse$kfd$1...@news.eternal-september.org>,
> Mark Bole <ma...@pacbell.net> wrote:
> > removep...@yahoo.com wrote:
> > >>> 2) Can I also make a traditional ira contribution in 2010 and
> > >>> immediatly do the roth ira conversion after ( so the 2010 amount
would
> > >>> be included ? )
> > >> Wouldn't it be simpler to just do the Roth conversion directly?
> > >
> > > Sorry, typo, I meant Roth *contribution* directly.
> >
> > I recall that the removal of AGI-based limits only applies to
> > conversions, not contributions. So he still cannot make a direct
> > contribution to a Roth if AGI too high. This approach (Trad. Roth
> > non-deductible contribution -> Roth conversion) is the only way to do
it.
>
> Pretty silly. So Congress is has effectively removed the AGI limit on
> Roth contributions for the year, but you have to do extra paperwork to
> take advantage of it.
That's the Paperwork Reduction Act at work! ;-)
D. Stussy
news:m33a3g5...@swing-shift.time-tripper.com...
> Steve K <stevecl...@gmail.com> writes:
> > I have made contributions to a traditional ira in the years
> > 2007,2008,2009.
> >
> > I wish to convert this traditional ira to a roth ira in 2010. I have
> > a few questions:
> >
> > 1) What is the earliest date the conversion can be done ? What is
> > the deadline date ?
>
> Earliest: 1 January 2010
Which is practically January 4, as usually no one is open on the holiday or
weekend.
> Deadline: 31 December 2010
>
> > 2) Can I also make a traditional ira contribution in 2010 and
> > immediatly do the roth ira conversion after ( so the 2010 amount would
> > be included ? )
>
> Yes.
>
> > 3) Are we able to do such a conversion in 2011 and later years or is
> > 2010 the only year ?
>
> Under *current law* you can do it in 2010 and any year thereafter.
However, ONLY 2010 has the two-year-deferred spread (into 2011 and 2012).
hr(bob) hofmann@att.net
wrote:
> "Rich Carreiro" <rlc-n...@rlcarr.com> wrote in message
>
> news:m33a3g5...@swing-shift.time-tripper.com...
>
> > Steve K <steveclayto...@gmail.com> writes:
> > > I have made contributions to a traditional ira in the years
> > > 2007,2008,2009.
>
> > > a few questions:
>
> > > 1) 锟絎hat is the earliest date the conversion can be done ? 锟絎hat is
> > > the deadline date ?
>
> > Earliest: 1 January 2010
>
> Which is practically January 4, as usually no one is open on the holiday or
> weekend.
>
> > Deadline: 31 December 2010
>
> > > immediatly do the roth ira conversion after ( so the 2010 amount would
> > > be included ? )
>
> > Yes.
>
> > > 2010 the only year ?
>
> > Under *current law* you can do it in 2010 and any year thereafter.
>
> However, ONLY 2010 has the two-year-deferred spread (into 2011 and 2012).
Is the deferred tax payment spread into 2011 and 2012 mandatory, or
can you take 1/3 in 1010, 1/3 in 2011, and 1/3 in 2012 ??
Phil Marti
> Is the deferred tax payment spread into 2011 and 2012 mandatory, or
> can you take 1/3 in 1010, 1/3 in 2011, and 1/3 in 2012 ??
The 2011/2012 split is the default. You can elect to include it all
in 2010 if you do so by the extended due date of your 2010 return. No
other choices are available.
A quibble note. It's not the tax that's split, it's the income. That
means that the tax will depend on what rates are in effect during the
year(s) the income is recognized.
Phil Marti
Clarksburg, MD
D. Stussy
news:1bf21f47-6eef-4b7a...@z41g2000yqz.googlegroups.com...
> >...
> > > > 3) Are we able to do such a conversion in 2011 and later years or
is
> > > > 2010 the only year ?
> >
> > > Under *current law* you can do it in 2010 and any year thereafter.
> >
> > However, ONLY 2010 has the two-year-deferred spread (into 2011 and
2012).
>
> Is the deferred tax payment spread into 2011 and 2012 mandatory, or
> can you take 1/3 in 1010, 1/3 in 2011, and 1/3 in 2012 ??
All in 2010 or 50% each in 2011 and 2012.
Arthur Kamlet
Phil Marti <prm2...@verizon.net> wrote:
>On Dec 17, 11:10�pm, "hr(bob) hofm...@att.net" wrote:
>
>
>> Is the deferred tax payment spread into 2011 and 2012 mandatory, or
>> can you take 1/3 in 1010, 1/3 in 2011, and 1/3 in 2012 ??
>
>The 2011/2012 split is the default. You can elect to include it all
>in 2010 if you do so by the extended due date of your 2010 return. No
>other choices are available.
And if filing jointly and each spouse converts, each spouse can make
either election regardless of what election is made by the other.
>A quibble note. It's not the tax that's split, it's the income. That
>means that the tax will depend on what rates are in effect during the
>year(s) the income is recognized.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
hr(bob) hofmann@att.net
> In article <1fcdde82-d28b-40de-b9d4-507624205...@g26g2000yqe.googlegroups.com>,
> Phil Marti �<prm20...@verizon.net> wrote:
>
> >On Dec 17, 11:10�pm, "hr(bob) hofm...@att.net" wrote:
>
> >> Is the deferred tax payment spread into 2011 and 2012 mandatory, or
> >> can you take 1/3 in 1010, 1/3 in 2011, and 1/3 in 2012 ??
>
> >The 2011/2012 split is the default. �You can elect to include it all
> >in 2010 if you do so by the extended due date of your 2010 return. �No
> >other choices are available.
>
> And if filing jointly and each spouse converts, each spouse can make
> either election regardless of what election is made by the other.
>
> >A quibble note. �It's not the tax that's split, it's the income. �That
> >means that the tax will depend on what rates are in effect during the
> >year(s) the income is recognized.
>
> --
>
> ArtKamlet �at �a o l dot c o m �Columbus OH �K2PZH
Are there special forms that will have to be used??
Arthur Kamlet
hr(bob) hof...@att.net <hrho...@att.net> wrote:
>On Dec 18, 12:48�pm, kam...@panix.com (Arthur Kamlet) wrote:
>> In article
><1fcdde82-d28b-40de-b9d4-507624205...@g26g2000yqe.googlegroups.com>,
>> Phil Marti �<prm20...@verizon.net> wrote:
>>
>> >On Dec 17, 11:10�pm, "hr(bob) hofm...@att.net" wrote:
>>
>> >> Is the deferred tax payment spread into 2011 and 2012 mandatory, or
>> >> can you take 1/3 in 1010, 1/3 in 2011, and 1/3 in 2012 ??
>>
>> >The 2011/2012 split is the default. �You can elect to include it all
>> >in 2010 if you do so by the extended due date of your 2010 return. �No
>> >other choices are available.
>>
>> And if filing jointly and each spouse converts, each spouse can make
>> either election regardless of what election is made by the other.
>>
>> >A quibble note. �It's not the tax that's split, it's the income. �That
>> >means that the tax will depend on what rates are in effect during the
>> >year(s) the income is recognized.
>>
>> --
>>
>> ArtKamlet �at �a o l dot c o m �Columbus OH �K2PZH
>
>Are there special forms that will have to be used??
IRS has not announced the specifics yet, but somehow it will
have to be reported.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
--