Roth Conversions

I've been getting few questions lately on the prudence of converting IRAs to Roth IRAs, driven in part by the lower balances (and corresponding tax liabilities) of clients' IRA accounts.

Though some people are currently limited because their Modified Adjusted Gross Income exceeds $100,000, this limitation is going away in 2010. Also, conversions made in 2010 have the added advantage of having the tax liability spread over 2010, 2011, & 2012.

If you are able to convert in 2008, there are a number of points to consider (see the link above) and one crucial date - December 31. You can undo the conversion without penalty before you file your taxes, but if you wait until 2009, you've lost the ability to convert in 2008.

Additional Links: http://www.fairmark.com/rothira/index.htm