Home > Tax News & Info > Roth Medley: Recent Announcements about Roth IRA’s

Roth Medley: Recent Announcements about Roth IRA’s

Roth Conversion Remorse

If you converted some of your traditional IRA money to a Roth IRA in 2010 and are now watching the balance in your Roth fall due to the decline in the market, some relief may be available.  The IRS is allowing those who have made the conversion to undo the switch by October 17th and recover the tax paid.  If you have already paid the tax on your 2010 individual tax return, you may amend your return to recover the tax. You also have the ability to wait 30 days and re-convert back to a Roth with the smaller balance and thus a lower tax bill.

Convert to Your Advantage

If you are thinking about converting your IRA to a Roth IRA, think about splitting your different asset classes into their own Roth account. The benefit of doing this is that you will be able to transfer your poor performing assets back into a regular IRA, tax and penalty free, and leave the rest to continue to grow.  This should give you lots of flexibility with your accounts and if you timely file your 2011 individual tax return you will have until October 2012 to change your mind and unconvert those assets back to a regular IRA. Note: the $100,000 AGI cap on conversions has expired, along with the option to defer the tax payment for two years on conversions.

Penalty Exceptions from IRA payouts

Not all early distributions from IRA’s and similar plans are subject to a 10% penalty tax.  Exceptions are listed on an IRS Distribution Chart.

Comments ( 0 )
  1. No comments yet.
Comments are currently closed.
Trackbacks & Pingbacks ( 0 )
  1. No trackbacks yet.
  2. Trackbacks are currently closed.