Whats the downside to Roth IRAs?
The following is a brief list of negative issues regarding Roth IRAs: • Theres never a deduction for Roth IRA contributions. • To build a sizable Roth IRA fund, you must convert a traditional IRA (or, after 2007, funds form an employer plan). Conversions are taxable. • In converting to a Roth IRA, you risk an excess contribution penalty and an early withdrawal penalty, if income exceeds $100,000. This rule is scheduled to end after 2009. See note below. Note: The rule barring conversion to Roth IRA for taxpayers with MAGI above $100,000 is scheduled to end after 2009. All taxpayers will be able to convert a regular IRA to a Roth IRA in 2010. The conversion will be a taxable distribution which can be taken into income in 2010 or averaged over the next two years. The conversion will not be subject to the 10% early distribution penalty. Congress passed the removal of the $100,000 MAGI ceiling under unusual circumstances. We will keep you posted on whether this rule will actually go into e
A. The following is a brief list of negative issues regarding Roth IRAs: • There s never a deduction for Roth IRA contributions. • To build a sizable Roth IRA fund, you must convert a traditional IRA. Conversions are taxable. • In converting to a Roth IRA, you risk an excess contribution penalty and an early withdrawal penalty, if income exceeds $100,000.
The following is a brief list of negative issues regarding Roth IRAs: • There’s never a deduction for Roth IRA contributions. • To build a sizable Roth IRA fund, you must convert a traditional IRA (or, after 2007, funds form an employer plan). Conversions are taxable. • In converting to a Roth IRA, you risk an excess contribution penalty and an early withdrawal penalty, if income exceeds $100,000. This rule is scheduled to end after 2009. See note below. Note: The rule barring conversion to Roth IRA for taxpayers with MAGI above $100,000 is scheduled to end after 2009. All taxpayers will be able to convert a regular IRA to a Roth IRA in 2010. The conversion will be a taxable distribution which can be taken into income in 2010 or averaged over the next two years. The conversion will not be subject to the 10% early distribution penalty. Congress passed the removal of the $100,000 MAGI ceiling under unusual circumstances. We will keep you posted on whether this rule will actually go into
