‘Banking Convenience Account for Depositors Act’ Goes Into Effect January 1, 2010 No Federal Estate Tax for Decedents dying in 2010

New Rules for Roth IRA Conversions

Beginning in 2010, most investors will be eligible to convert their traditional IRAs to Roth IRAs, regardless of how much money they make. There is also a special rule in place for 2010 only that will allow you to recognize all of the conversion income in 2010 or split it equally between the next two tax years (2011 and 2012).

Money put into a traditional IRA is tax –deductible no matter how much money you make, unless you are covered by an employer-sponsored plan, in which case you may receive a reduced or no deduction for the contribution to the IRA. With a Roth, contributions are not tax-deductible, but earnings can be withdrawn income tax free if you’re at least 59 ½ and have had the Roth at least 5 years. Additionally, you are not required to take required minimum distributions beginning at age 70 ½.

Roth conversions may be appropriate if you think you will be in the same or higher tax bracket when you withdraw the funds and you have sufficient funds outside of the IRA to pay the conversion tax.

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