Quick question regarding ROTH rollovers in 2010.
The way I understand the current tax code, next year, there won't be any income limits on ROTH IRA rollovers, is that correct? If so, is it just for 2010 or after that as well? Will a law need to be changed in order for it go into effect after 2010?
The reason I ask is because we recharacterized our 2008 ROTHs into non-deductible TIRA due to the fact that our MAGI was above the income phaseout limits. Prior to 2008, we were able to (and we did) contribute the max to our ROTHs. We will be above the income limits this year and hopefully next year as well, thus we'll be maxing out our contributions to non-deductible TIRA for 2009 and 2010.
I also understand that you only pay taxes on earnings when you rollover from TIRA to ROTH, correct?
If this is all correct, what we plan on doing is making our 2009 & 2010 non-deductible TIRA contributions in January of 2010 (it will hopefully be a total of 20k between the two of us). Then as soon as this is done, and in that same month of January, we'll rollover the 2008, 2009, and 2010 TIRAs into ROTH IRAs. I figure we'd only pay a small amount of taxes (mostly from the earnings of the 2008 TIRA) if we do it this way.
Depending on the value of the 2008 TIRA in January, we'll essentially have a 30k rollover.
Does this make sense and is it doable?
TIA for any comments, suggestions, concerns......
The way I understand the current tax code, next year, there won't be any income limits on ROTH IRA rollovers, is that correct? If so, is it just for 2010 or after that as well? Will a law need to be changed in order for it go into effect after 2010?
The reason I ask is because we recharacterized our 2008 ROTHs into non-deductible TIRA due to the fact that our MAGI was above the income phaseout limits. Prior to 2008, we were able to (and we did) contribute the max to our ROTHs. We will be above the income limits this year and hopefully next year as well, thus we'll be maxing out our contributions to non-deductible TIRA for 2009 and 2010.
I also understand that you only pay taxes on earnings when you rollover from TIRA to ROTH, correct?
If this is all correct, what we plan on doing is making our 2009 & 2010 non-deductible TIRA contributions in January of 2010 (it will hopefully be a total of 20k between the two of us). Then as soon as this is done, and in that same month of January, we'll rollover the 2008, 2009, and 2010 TIRAs into ROTH IRAs. I figure we'd only pay a small amount of taxes (mostly from the earnings of the 2008 TIRA) if we do it this way.
Depending on the value of the 2008 TIRA in January, we'll essentially have a 30k rollover.
Does this make sense and is it doable?
TIA for any comments, suggestions, concerns......