Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
T-IRA to ROTH-IRA. When?
Old 11-30-2006, 09:13 PM   #1
Recycles dryer sheets
 
Join Date: Aug 2005
Posts: 480
T-IRA to ROTH-IRA. When?

Recently I heard that the best time to convert traditional iras to roth iras will come in 2010. I'm not sure if that had to do with tax rates, or simply the amount that can be converted in a single year. For 2006 it's not an issue for me, had some big income this year and am in a high bracket. But 2007 and 2008 I'll be living off this year's income and probably be in the lowest tax bracket that I'll ever see.

How can i find info to learn what i CAN do, and to decide what i SHOULD do?
__________________

__________________
Gearhead Jim is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: T-IRA to ROTH-IRA. When?
Old 11-30-2006, 09:24 PM   #2
Recycles dryer sheets
 
Join Date: Jul 2004
Posts: 430
Re: T-IRA to ROTH-IRA. When?

Starting in 2010, the maximum AGI limit of $100K to be eligible to convert will be eliminated. Also, if you do a conversion in 2010, the amount of income tax you'll need to pay can be spread over 2 years.
__________________

__________________
gindie is offline   Reply With Quote
Re: T-IRA to ROTH-IRA. When?
Old 11-30-2006, 09:56 PM   #3
Recycles dryer sheets
 
Join Date: Aug 2005
Posts: 480
Re: T-IRA to ROTH-IRA. When?

Thanks. Will the two-year tax spread apply only to 2010, or could a person convert some more in 2012 and spread two years then again?
__________________
Gearhead Jim is offline   Reply With Quote
Re: T-IRA to ROTH-IRA. When?
Old 12-01-2006, 09:18 AM   #4
Moderator Emeritus
Martha's Avatar
 
Join Date: Feb 2004
Location: minnesota
Posts: 13,212
Re: T-IRA to ROTH-IRA. When?

Its a one time thing.
__________________
.


No more lawyer stuff, no more political stuff, so no more CYA

Martha is offline   Reply With Quote
Re: T-IRA to ROTH-IRA. When?
Old 12-01-2006, 02:38 PM   #5
Thinks s/he gets paid by the post
Bikerdude's Avatar
 
Join Date: Jul 2006
Posts: 1,901
Re: T-IRA to ROTH-IRA. When?

I’ve been living on after tax withdrawals since retiring and have been in the 15% bracket. I have been converting regular IRA to Roth IRA every year up to the 15% limit. I think this will give me a lot of flexibility going forward.
__________________
“I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said” Alan Greenspan
Bikerdude is offline   Reply With Quote
Re: T-IRA to ROTH-IRA. When?
Old 12-01-2006, 04:10 PM   #6
Recycles dryer sheets
 
Join Date: Nov 2003
Location: Charlotte
Posts: 360
Re: T-IRA to ROTH-IRA. When?

So.... If I decide to convert $50k on January 2. 2010, I will have $25k taxable on my 2010 return and $25k taxable on my 2011 return, correct?
__________________
WilliamG is offline   Reply With Quote
Re: T-IRA to ROTH-IRA. When?
Old 12-05-2006, 09:00 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,290
Re: T-IRA to ROTH-IRA. When?

What someone told me at work is to contribute to an after tax IRA (high income so can't do pre tax)....

Then convert in 2010... only have to pay tax on the income from now to then!!!

Any holes in this
__________________
Texas Proud is offline   Reply With Quote
Re: T-IRA to ROTH-IRA. When?
Old 12-06-2006, 09:34 AM   #8
Moderator Emeritus
Martha's Avatar
 
Join Date: Feb 2004
Location: minnesota
Posts: 13,212
Re: T-IRA to ROTH-IRA. When?

Quote:
Originally Posted by Texas Proud
What someone told me at work is to contribute to an after tax IRA (high income so can't do pre tax)....

Then convert in 2010... only have to pay tax on the income from now to then!!!

Any holes in this
No. I have thought about doing the same thing. They might change the law so we can't convert, but heck, how much money can we put in an IRA between now and then anyway?
__________________
.


No more lawyer stuff, no more political stuff, so no more CYA

Martha is offline   Reply With Quote
Re: T-IRA to ROTH-IRA. When?
Old 12-06-2006, 10:37 PM   #9
Thinks s/he gets paid by the post
retire@40's Avatar
 
Join Date: Feb 2004
Posts: 2,670
Re: T-IRA to ROTH-IRA. When?

Quote:
Originally Posted by gindie
Starting in 2010, the maximum AGI limit of $100K to be eligible to convert will be eliminated. Also, if you do a conversion in 2010, the amount of income tax you'll need to pay can be spread over 2 years.
Although electing to spread over the 2 years may not end up being the smartest move for some people.
__________________
No man is free who is not master of himself. --- Epictetus
Enjoy Yourself (It's Later Than You Think). --- Guy Lombardo
retire@40 is offline   Reply With Quote
Re: T-IRA to ROTH-IRA. When?
Old 12-06-2006, 11:49 PM   #10
Recycles dryer sheets
 
Join Date: Aug 2005
Posts: 480
Re: T-IRA to ROTH-IRA. When?

Quote:
Originally Posted by retire@40
Although electing to spread over the 2 years may not end up being the smartest move for some people.
Offhand, I can't think of very many situations where the 2 year spread would be unwise. Can you please post some of your examples?
__________________
Gearhead Jim is offline   Reply With Quote
Re: T-IRA to ROTH-IRA. When?
Old 12-07-2006, 07:02 AM   #11
Thinks s/he gets paid by the post
retire@40's Avatar
 
Join Date: Feb 2004
Posts: 2,670
Re: T-IRA to ROTH-IRA. When?

Quote:
Originally Posted by Gearhead Jim
Offhand, I can't think of very many situations where the 2 year spread would be unwise. Can you please post some of your examples?
One major reason is that the income tax rates are set to revert back to the higher old rates after 2010.
__________________
No man is free who is not master of himself. --- Epictetus
Enjoy Yourself (It's Later Than You Think). --- Guy Lombardo
retire@40 is offline   Reply With Quote
Re: T-IRA to ROTH-IRA. When?
Old 12-07-2006, 11:10 AM   #12
Recycles dryer sheets
 
Join Date: Aug 2005
Posts: 480
Re: T-IRA to ROTH-IRA. When?

Quote:
Originally Posted by retire@40
One major reason is that the income tax rates are set to revert back to the higher old rates after 2010.
Yes, that could be a big issue.
__________________
Gearhead Jim is offline   Reply With Quote
Re: T-IRA to ROTH-IRA. When?
Old 12-07-2006, 01:42 PM   #13
Recycles dryer sheets
pfpelican's Avatar
 
Join Date: Jun 2006
Posts: 229
Re: T-IRA to ROTH-IRA. When?

My situation is admittedly off-beat...but the taxation of 2010 conversions is deferred into 2011 and 2012. 2012 is the year I start Social Security. The additional income I'd have to recognize in 2012 added to 1/2 my social security benefit and RMDs would push me over the $44,000 limit for 85% social security taxation.

__________________

__________________
Old Guys Rule
pfpelican is offline   Reply With Quote
Reply

Tags
ira


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Traditional IRA to Roth Conversion Question Dog FIRE and Money 5 03-10-2007 10:53 PM
?? for uber-savers, non-deductible IRA to Roth IRA in 2010 LOL! FIRE and Money 8 12-21-2006 01:25 AM
Roth IRA & Timber Rights/Tree Farm terminator FIRE and Money 6 07-16-2006 04:09 PM
Roth 403b AND Roth IRA? macdaddy FIRE and Money 3 07-05-2006 07:25 PM
Not eligible for Roth IRA - conversion? Lusitan FIRE and Money 9 02-23-2006 11:00 AM

 

 
All times are GMT -6. The time now is 07:54 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.