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2010 Roth IRA Conversion Mini-Roundup

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As 2010 winds down, you might be considering a Roth IRA conversion. 2010 is different than other years because the income restriction on conversions has been lifted. Last year, if you had an adjusted gross income over $100,000 then you couldn’t convert a Traditional IRA to a Roth IRA. While this limit may seem high, remember that the limit applies to both singles and married couples. Many more tax filers who are looking to convert are married filing jointly with an AGI above $100,000. The 2010 conversion loophole lets those taxpayers convert (whether or not you should convert is a totally different story).

Zapeta emailed me the other day asking me if I could do a mini-roundup of all the 2010 Roth IRA conversion posts I’ve written and so here it is!

2010 Roth IRA Conversion Rules – This post covers the loophole itself as well as some of the rules and considerations involved with a Roth IRA conversion. It briefly goes into whether or not you should convert, including tax rules and implications of a conversion. It’s the most comprehensive post of the bunch.

Four Factors to Consider Before Roth IRA Conversion – This post goes into greater detail on the decision process in conversion, specifically the things you need to think about before you convert. It’s not always a win-win situation, especially if you start taking tax credits or deductions off the table because of your increased income (you claim income on the conversion amount).

Consequences of a Large Roth IRA Conversion – Along the same lines as the above post, this discusses consequences of a large Roth IRA conversion.

Roth IRA Workaround: 2010 Conversion Limit Loophole – This post was written in 2008, when we first learned about the loophole. I included it for posterity. :)

Roth and Traditional IRA Contribution Limits – This post discusses the Roth and Traditional IRA contribution limits and isn’t specifically directed at the Roth IRA conversion (there is no limit on how much you can convert).

Roth IRA Account Explained – Finally, this last post is a Foundation post explaining how the Roth IRA works.

I hope that helps!

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12 Responses to “2010 Roth IRA Conversion Mini-Roundup”

  1. zapeta says:

    Thanks for putting this together! It is appreciated. Now I have to figure out if I am going to convert this year.

  2. This is a lot of great info on the ROTH conversion. It’s a critical part of a total financial plan. We don’t know what taxes will be in the future, but we all know they will probably be going up. Nice roundup.

  3. live green says:

    I actually have a question on the topic of Roth IRA/Traditional IRA that is somewhat related to this topic.

    Once you hit over the income limits for being able to contribute into a Roth, is it still suggested to contribute to a Traditional IRA?

    I ask this because at this point, you no longer qualify for a tax deduction on the traditional at this point as well. I searched the net a bit and didn’t really find an answer to this question. I am not anywhere near the point where I won’t be able to contribute to a Roth( I wish :) ), but am just curious.

    • billsnider says:

      The sum total of your Roth and IRA contributions cannot exceed your max limit.

      Bill Snider

    • Texas Wahoo says:

      You can contribute to a non-deductible traditional IRA and immediately convert it to a roth IRA.

    • live green says:

      I was thinking more in terms of after this year when the conversion is no longer available. I guess an advantage is that you could wait until the possibility of the next time they do a conversion and transfer all of your money over at that point. I just wasn’t sure if there was still an advantage of contributing to a Traditional IRA since the tax benefits are no longer there and you are no longer able to contribute to a Roth.

      • Texas Wahoo says:

        I believe that the income limits for conversions are eliminated permenantly (unless they change it). You can no longer spread out the tax payments over multiple years after 2010, but that doesn’t matter for non-deductible IRAs anyway.

      • live green says:

        I am really confused on why they are eliminating the income limits on conversions from this point forward. If there is no longer a limit, why even have the income limits on the Roth anymore? They seem worthless as you can now get around them. You can simply contribute to an IRA and then convert it immediately to a Roth every year.

      • govenar says:

        Even if you couldn’t convert to a Roth, I think there’s a tiny advantage to making non-deductible contributions to a Traditional IRA: you won’t be taxed on gains/dividends throughout the years until you withdrawal, so compounding would have a greater effect. But I don’t think that small benefit outweighs the drawbacks of an IRA. (But as other people mentioned, this doesn’t matter now anyway since you can convert to Roth.)

  4. cdiver says:

    Much needed info. Thank you.

  5. Working Mom of 2 says:

    In “The Gospel of Roth- The Good News About Roth IRA Conversions and How They Can Make You Money” by John Bledsoe it clearly states in the book that NO ANALYSIS is needed and that everyone should convert to a Roth IRA regardless of income. There is NO risk! The IRS is giving us a year to recharacterize or “undo” the conversion. This book gives the ins and outs for Roth IRAS! It really helped answer all my questions.

  6. Ken says:

    Need to do this with my tradition IRA.


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