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Conversion to Roth
Old 07-06-2009, 07:02 PM   #1
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Conversion to Roth

This would be a great year for some to convert their IRA to a Roth, or at least some of it. That is if you are not taking the MRD since not necessary this year. I am going to check how it would affect my income taxes since I would only take as much as would keep me in 15% tax bracket and my Social Security taxed at a minimum. If I don't convert, I might be able to have no tax on our SS. We are in our 70's.

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Old 07-06-2009, 07:14 PM   #2
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Your mention of MRD poses an interesting question. If you are taking MRD then you can still convert, however, you can not use the MRD as part of your conversion. i.e. if you have a 5K MRD you can can take our 15k and convert 10k to roth. Now if you don't have to take an MRD this year could you convert the entire 15k? This does not affect me, just wondering.

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Old 07-06-2009, 07:16 PM   #3
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For many people, next year will be the best time to convert in years.

For one thing, there will be no income limits on the ability to convert (not that those in obscenely high brackets would usually want to convert). Secondly, anyone converting in 2010 can (under current tax law) split the tax liability between 2011 and 2012.

But in reality, I think a Roth conversion for anyone in the 15% bracket or below is usually a good idea if they can afford to pay the taxes on it; it eliminates RMDs that one may not need to take, and it helps the tax status of an estate for heirs if one doesn't need the money for themselves.
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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