IRA Update from Ed Slott

May 12, 2006

Big Roth IRA story….

New tax bill eliminates eligibility rules for Roth IRA conversions

The House passed the Tax Increase Prevention and Reconciliation Act (TIPRA) Wednesday, the Senate passed it yesterday, and the President is expected to sign it into law.

The change is not effective until 2010!!!

For conversions done in 2010 the taxes can be spread ratably over 2 years and included in income for 2011 and 2012.

That is not a typo; the taxes due on a conversion done in 2010 can be included in income for 2011 and 2012!

A taxpayer with MAGI over $100,000 or who had a tax filing status of married filing separate was not eligible to convert to a Roth IRA. Those restrictions disappear as of January 1, 2010 allowing anyone with an IRA the ability to convert to a Roth IRA.

Look for more details in the June 2006 issue of “Ed Slott’s IRA Advisor”

By Ed Slott © 2006

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