Time is Running Out for IRA Conversions

The Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) has given investors the opportunity to convert Traditional IRAs to Roth IRAs with a tax incentive, but time is running out; this window of opportunity is open only until the end of 2010!

The big difference in this incentive is how income is reported. Up until 2010, any amount converted from a Traditional to a Roth IRA had to be reported as income on that year’s tax return. For 2010, conversions won’t have to be reported on your 2010 tax return. Under this Act, you’re able to split the reported taxes over two years: 2011/2012.

As an example, if you convert a Traditional IRA worth $100,000 to a Roth IRA in 2010, you could report $50,000 in income for 2011 and $50,000 for 2012.

In addition, because you’re converting your investment to a Roth IRA, you’re taking care of taxes now, leaving you to potentially enjoy tax-free withdrawals for qualified distributions¹. And don’t forget, with the Roth IRA, you have no mandatory distribution of funds at age 70½ like you would have with a Traditional IRA.

Please note:
You must act before the end of 2010! This is a one-year opportunity only. 2010 is the only year this special tax incentive on converting IRAs will be available.

You can access our Retirement Central for more information, open your new Roth IRA and more. You can also contact our Vantage Investment Services Group.

For more information about The Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA), click here.

_{1 See the “Qualified Distributions” section at www.fairmark.com/rothira/taxfree.htm for information.}