It's looking more likely that the expiring Bush tax cuts will live at least a bit longer and that's starting to have a domino effect.
Take Roth IRA conversions. With the elimination of the $100,000 income cap, anyone can now convert a traditional IRA to a Roth.
That also means that taxes on the converted retirement plan money, which were deferred, are then due.
Folks who convert in 2010, however, get the option to divide up their IRA-related tax bill and spread it equally over two future tax years, specifically 2011 and 2012.
When it looked like ordinary income tax rates, which apply to taxable IRA distributions, might be higher in 2011 and beyond, that conversion deferral didn't look so good.
But now that the odds are increasing that the tax rates will stay the same for a year or two, some people are taking the Roth IRA conversion plunge.
I go into more detail in my The rush to Roth IRAs post at my Bankrate Taxes Blog.
Check it out, as well as the related posts listed below, to help you decide whether it might be worth it to convert your traditional IRA to a Roth IRA.
- Are you ready for a Roth
- Are you ready for a Roth conversion?
- Handy retirement plan rollover chart
- Roth IRAs and your retirement income
- New retirement savings option: Rolling regular 401(k) money
into a Roth 401(k)
- Wisconsin tax tidbit: Roth conversions
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