Starting Jan. 1, taxpayers with a modified-adjusted-gross income of more than $100,000 will be permitted to convert a traditional individual retirement account to a Roth.
Until now, IRA conversions have been available only to those who earn a modified-adjusted-gross income of less than $100,000; few advisers had clients who could take advantage of the accounts.
A provision in the Tax Increase Prevention and Reconciliation Act of 2005, however, removes the income restriction on Roth IRA conversion eligibility and offers a special tax incentive for those who choose to convert during 2010 — the option to include the taxable portion of any 2010 conversions in taxable income for 2011 and 2012.
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