41 Days Remaining for 2010 Roth Conversion

1:39 pm Uncategorized

While there are 36 days remaining for Christmas shopping, you can tack on another five days if you are shopping for 2010 tax savings.

Converting a traditional IRA or 401(k) to a Roth IRA can provide you with a beneficial delayed tax payment that is only available this year.  But to qualify, you must begin the conversion process by Dec. 31, 2010.

For 2010 only, taxpayers have a choice as to when they pay the tax on the conversion – they can pay on their 2010 return or pay half on their 2011 return and the other half on their 2012 return.  If you select the second option, taxes are not due until April 15, 2012 and 2013.  After this year, all conversion taxes must be paid at once in the full amount.

The simplest way to do a Roth conversion is to have the administrator of your current account handle the transfer.  If you have the IRA distribution sent to you, then you must deposit the full amount into a Roth IRA account within 60 days or face an early withdrawal penalty.  If you receive the distribution before the end of December, you still have the full 60 days to deposit it in a Roth IRA and qualify for the 2010 conversion.

Contact us today and let our Newport Beach law firm help you with all your financial planning needs.

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