Traditional to Roth IRA Conversion

2010 is the first year that high-income earners can convert a traditional IRA to a Roth IRA. They can also spread the tax liability for the conversion over the next two years.

What this means is that now anyone can invest in a Roth IRA regardless of income limits. There are no income limits to open up a non-deductible IRA. So, if you are a high income earner, simply open up a non-deductible IRA for $5,000 ($6,000 if over age 50), and immediately convert it to a Roth. If you already own a traditional deductible IRA, you will have to convert a portion of that IRA and pay taxes, so this strategy does not make sense for everyone. Regardless, 2010 has opened up new tax planning strategies that you can discuss with your tax professional.

Whether you are changing jobs and are looking to rollover your 401k account balance to an IRA or you have 401k and/or IRA balances elsewhere, you may want to consider our managed IRA approach. The $10,000 minimum investment requirement has been reduced to $7,500 for individuals who wish to take advantage of the above strategy.

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