Gold 401K

Roth IRA Conversions

I've been looking for the silver lining to the current stormy clouds ANY almost all investors have weather.

2010 should be a exciting year for investors who are still saving for retirement (and even those who may have to start saving again!).

The announcement below was originally sent to our customers in mid 2007 – well before the current slump. If your balance is lower now than it was then, this strategy could make even more sense.

Chappell Mayfield and Associates admits to being green. Therefore, here is a recycled idea …………..

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Originally posted March 2, 2007

2010: A Roth odyssey

On May 17, 2006, President Bush signed the Tax Increase Prevention and Reconciliation Act of 2005 (Tipra). The law contains many provisions, however, there is a provision that is one of the most exciting things I remember in my 10 years in this business.

First, let's review:

• Withdrawals from a traditional IRA at retirement are taxable income, withdrawals from a Roth IRA at retirement are not subject to income tax (with some limitations – consult your tax advisor).

• Under current law, a couple (or single for that matter) must have an adjusted gross income of less than $ 100,000 to convert an IRA (or 401k rollover) to a Roth IRA.

Drum roll please …………:

• In 2010 (due to Tipra), you can convert an IRA, 401k turnover, and virtually any type of retirement plan to a Roth IRA, regardless of income.

• The rules also allow taxpayers to spread the conversion tax over the next two years (2011 and 2012)!

"OK. So how does it affect me?"

The main advantage of a Roth IRA is that withdrawals are made, after age 59, totally tax-free income. Besides, There is no required minimum distribution after you reach 70 ½, as exists with a traditional IRA.

The decision to convert or not convert, will be affected by many issues, including life expectancy and expectation of the classification of taxes at retirement. Needless to say, we have calculators and other resources to help you make your decision.

 

"What I can do in the meantime?"

• Almost always a good idea to get the maximum retirement savings. This event makes it even more attractive.

• If you are unable to contribute to a Roth now, contributing to a traditional IRA …. that can be converted in 2010.

• If you have an old man for around 401k, do not automatically roll into the new 401 (K) at work. Consider rolling over your IRA and funding it … that can be converted in 2010.

• Many 401 (k) plans allow you to renew your balance, even while working. May be a good idea to strengthen their contributions to the expected 2010.

• Imagine having a pool of money to get to retirement that is 100% income tax free forever!

For some, it may even affect your 2008 taxes. There is still time to have a substantial impact on your retirement savings by 2010 – and beyond.

About the Author

As co-founder of Chappell, Mayfield & Associates, Cass offers expertise in financial planning, wealth accumulation, retirement planning, insurance planning, business continuation planning, and employee benefits.

Cass launched his financial planning career as an agent for Prudential Financial in 1996, and later, a manager in the company’s financial services division. Since then, Cass has earned the CFP®, CLU, and ChFC designations, reflecting his commitment to excellence in investment decision-making and financial planning. He also holds a B.S. in Management from Georgia Tech.

Cass has lived in Atlanta since 1992 and is married to Alison.

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