Convert Roth IRAs by December 31, 2010 for Big Payoff
The Roth conversions made in 2010 may be un-converted or recharacterized anytime until October 17, 2011; therefore, the final decision for 2010 conversions is not until then.
- Dallas, TX (1888PressRelease) December 21, 2010 - Congress just made it official by extending the Bush income tax cuts for two more years. You should convert all of your IRAs to Roth IRAs before the end of the year. Only Roth conversions made in 2010 qualify for a special interest-free treatment with the income tax payment on the conversion extended to 2011 and 2012.
You will have the advantage of seeing how your Roth accounts performed before the October 2011 deadline.
"Advising people not to convert now is like telling them not to wear a seat belt while driving," said John Bledsoe, President of John Bledsoe Associates. "There's no logic for not doing it." If it makes it easier psychologically, convert everything now to Roth IRAs and plan on unconverting before the deadline. That way you hold all the cards when you check out your situation next October.
The Roth conversions made in 2010 have no risk, as they may be undone. Alternatively, there is a huge risk in not converting as you cannot convert in arrears. The conversion should be made into multiple Roth IRAs for maximum benefit. If you wait until 2011 to convert, you will have to pay the taxes sooner than if you converted in 2010.
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