Warning: Cannot modify header information - headers already sent by (output started at /home/content/28/9933528/html/infinityfinancialservices/index.php:2) in /home/content/28/9933528/html/infinityfinancialservices/wp-content/themes/leafy/functions.php on line 434
InfinityFinancialServices.com » Blog Archive » Advantages of Roth IRA Rollover in 2010

Advantages of Roth IRA Rollover in 2010

Prior to the year 2010, all the United States citizens who earned an AGI (average gross income) more than an annual income of $100,000 were deemed ineligible to convert their traditionally held IRA assets to that of a Roth-IRA. However, after our former president Mr. George W. Bush approved the law of TIPRA (abbreviation used for the Tax Increase Prevention and Reconciliation Act) way back in 2006, anyone who has a traditional IRA account can now do a Roth-IRA rollover in 2010. This is irrespective of whether he or she earns an AGI that is greater than $100,000 annually.

Delay in tax payments:

The Roth IRA rollover is not just a simple conversion. There are some pre-requisites before you can do a complete Roth-IRA rollover. The first step is to clear the current income taxes which will be calculated on the total gains that you receive from this conversion. Even though your assets are going through one IRA account to another, the Internal Revenue Service treats this as if this is a taxable distribution.

As specified in the Roth-IRA rollover rules, this tax is to be paid for the year when you switch from your existing IRA to the new one. However, the TIPRA law also allows you to switch from your IRA account in 2010, and distribute your due tax to the coming years 2011 and 2012. This delay is added advantage that comes inbuilt with Roth IRA rollover.

Roth IRA rollover has become all the more popular because of the availability of withdrawing money tax free at the time of retirement. However, a disadvantage of this conversion is that you will not be allowed any deduction towards your tax paid for any contributions that you make to your Roth-IRA account. You could fund your traditional IRA with pre-tax money by deducting the taxes that were generated towards contributions made. In case you switch to Roth IRA, all the future withdrawals from your previously owned IRA can be taxable.

Benefits of Roth-IRA rollover in 2010:

During earlier times, IRA rollover’s included complex decisions and were immensely time-taking. People were required to analyze a number of factors that included their age, annual income, the tax bracket that they fell under and also the number of years after which they were due retirement. Now, the Roth IRA rollover has been simplified since it eliminates the aspect of the gross annual income. For people who are young and have a lot of time to their retirement, it is recommended that you switch as soon as you can. This will give you more time to regain your financial track after the tax hit.

People who have been investing in their traditional IRA’s for a long time hesitate to convert to Roth IRA. Majority of them blame this on the tax that is charged when switching to Roth IRA. However, with the recent decline in the stock market and the increased possibility of rise in tax rates are convincing factors for people to go ahead with the Roth-IRA rollover.

For more information and resources or to about how to get started with a Roth IRA Visit our website at: http://www.yourrothiraguide.com

Advantages of Roth IRA Rollover in 2010
By Mika Hamilton

Comments are closed.