Roth Conversion in 2010 Creates Unique Financial Planning Opportunities for High Income Taxpayers
Author: Robert G. Beaves.; Katherine M. Hetherington.; Lois D. Bryan.
Source: Volume 27, Number 02, Winter 2010 , pp.41-55(15)
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Abstract:
The year 2010 affords a unique financial planning opportunity for highincome taxpayers who have been ineligible to contribute or convert to a Roth Individual Retirement Account (IRA). For tax years prior to 2010, a taxpayer with high modified adjusted gross income (MAGI) could not contribute to a Roth IRA or convert a traditional IRA to a Roth IRA. The Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) permanently removes the income impediment to conversion beginning in 2010. For 2010 only, TIPRA also provides beneficial tax deferral by allowing the taxpayer to report half of the conversion amount as income in 2011 and the remainder in 2012. TIPRA opens the Roth IRA door to high-income taxpayers who were previously barred from participating in tax-free growth and withdrawal of retirement funds.Keywords:
Affiliations:
1: Robert Morris University; 2: Robert Morris University; 3: Robert Morris University.