The law firm of Einhorn, Harris, Ascher, Barbarito & Frost, P.C.

At Einhorn, Harris, we offer services related to wills, trusts, estate administration, estate planning, tax planning, business planning, shareholder agreements and mergers, elder law, long-term care, guardianships, prenuptial agreements, Medicaid, asset protection planning, and probate issues. We serve all of North Jersey and the New York Metro area including Denville, Mountain Lakes, Short Hills, Morristown, Montville , and the surrounding Morris, Essex, Sussex, Bergen, Passaic, Union, and Somerset Counties.

Sunday, January 31, 2010

Roth IRA Conversion

Lost among all of the talk about Federal estate tax repeal, is one of the greatest opportunities that Congress has given to many of my clients in years -- the uncapped Roth IRA conversion opportunity. Until 2010, a Traditional IRA could only be converted to a Roth IRA by a taxpayer with adjusted gross income of less than $100,000. However, starting this year, anyone can convert a Traditional IRA to a Roth IRA, regardless of the amount of adjusted gross income earned in the year. In analyzing the benefits of a Roth IRA conversion, I have found that most of my clients will achieve significant benefits from converting. Among the benefits achieved are:

(i) no required minimum distribution rules for the original owner of the Roth IRA;
(ii) the ability to pay income taxes from non-tax-deferred assets which, in effect, results in increased deferral opportunities; and
(iii) paying income taxes with dollars that might otherwise have been subject to estate taxes (effectively paying your kids future income tax liability with pre-estate tax dollars).

Of course, a Roth IRA conversion may not be right for everyone, but everyone should, at a minimum, consider whether it is right for their individual situation.

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