Who will be eligible to convert a traditional IRA to a Roth IRA?
As of January 1, 2010 anyone with a traditional IRA will be eligible to convert their IRA into a Roth IRA. The normal 10% tax penalty for traditional IRA distributions prior to the account owner at-taining age 59 ½ will not be assessed for a Roth IRA conversion. Will I be taxed on the conversion? The entire Roth IRA conversion amount will be considered taxable income. The IRS will allow you to spread the tax payments over two years—2011 and 2012. You may also choose to withhold for income taxes at the time of conversion. Please work closely with your CPA or tax professional to determine the best tax strategy for your situation. How is a Roth IRA different from a traditional IRA? A traditional IRA is characterized by deductible contributions that grow tax deferred until distribu-tion. When distributions are made from a traditional IRA they are considered ordinary income. Contributions to a Roth IRA are not deductible. Roth IRA contributions grow tax free because they are not taxed withi
