What is the real tax benefit of the 2010 Roth IRA conversion?
The real benefit of the “2010 rule” is that taxpayers with AGIs of more than $100k will be able to convert their traditional IRAs to Roth IRAs. Under current rules, taxpayers with AGIs in excess of $100k (single or married!) cannot do a Roth conversion. A secondary benefit is that the tax on the converted IRA can be spread over a two year period instead of being paid all at once. Anyone whose income would be pushed into a higher tax bracket with the all-at-once tax would potentially benefit from that, not just folks with incomes over $145k. The most significant benefactors would be taxpayers in the 15% bracket as the next bracket is 25%. Taxpayers already in the 25% bracket roll up only 3 points to 28% at their next bracket jump. That said, even if there would be no actual tax savings in any individual case — very possible for a married couple with modest incomes and not a huge IRA — spreading the tax bill over two periods allows the taxpayer to potentially pick more income on the de
