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.
Showing posts with label income taxes. Show all posts
Showing posts with label income taxes. Show all posts
Sunday, January 31, 2010
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