Way back in 2006 Congress included a provision in the Tax Increase Prevention & Reconciliation Act (TIPRA) that eliminated the modified adjusted gross income phase out rules in regards to Roth IRA Conversions that occur in 2010.
It is amazing to me that the current occupants of Congress and the White House have not removed this provision due to soaring budget deficits. After all they are taking the short sighted view of getting tax money today while they are in office, at the expense of getting no tax money in future years from traditional IRA distributions, when they may no longer be in office.
As we have seen over the years anything written into law can also be undone when it no longer benefits the party that is in power. However let’s assume that the politicians decide to enact this provision in the law. Should you take advantage of this opportunity, well it depends on your facts and circumstances, as well as where you think that tax rates are headed in the future.
Susan Tompor’s of the Detroit Free Press in an article entitled “Roth IRA conversion isn’t for everyone” provides a good summary of the pros and cons in regards to whether your should entertain the idea of a Roth IRA conversion.
To read her article please click here. http://www.freep.com/article/20091119/COL07/911190463/1088/Roth-IRA-conversion-isnt-for-everyone
You can also check out our Roth conversion calculator at http://www.numerico.com/calc-section.php?category=Retirement Then click on the Roth IRA Transfer Evaluator link to run the calculation.
This article was written by Jay Kossen, CPA at Numerico, PC. Click here to view Numerico’s website.
