Roth conversion in 2010 has two new angles

First, you can convert to a Roth IRA at any taxable income level. Before, your AGI had to be below $100,000. Now it can be anything.

Second, you can split your conversion tax over the next two tax years. Here's an example of how that will work:

Step 1: Convert $200,000 of IRA to Roth IRA in 2010.

Step 2: Pay tax on half ($100,000) of the conversion in tax year 2011. You'll owe the tax by April 15, 2012, using 2011 tax rates.

Step 3: Pay the other half of the conversion tax in tax year 2012. You'll owe the tax by April 15, 2013 using 2012 tax rates.

Now it is true that if tax rates are increased in 2011 or 2012, you may owe more tax on your conversion in those years than if you just went ahead and paid all the tax in 2010 tax year. But remember, you'll have time for your Roth account to grow tax-free while you are waiting to pay the tax.

So, if tax rates rise a little, you are probably better off waiting to pay the tax. But if they rise dramatically, you are better off just paying it right away.

THE IRA TAX RESCUE TRUST

If You Could Easily Give Your IRA To Your Spouse (Or Children) With NO TAX After You Are Gone, Would You? It's what the wealthy do, so why don't you?

Let's think through this....Let's say you leave your spouse (or children) $500,000 in your IRA when you are gone. What's the problem with that? It really isn't all theirs! If they wanted to cash it out, they would have to share anywhere from $150,000 to $200,000 with the IRS.

So what can you do about it? What if I told you that there existed an easy and simple way to pass your IRA to your spouse at your death completely and totally tax-free? If you could save your spouse in the above example $150,000 or $200,000 of tax, would you do it?
Of course you would! Who wouldn't?

Here's the good news. In almost every case, you can do exactly that. You can pass your normally taxable IRA to your spouse (or children even) with absolutely zero tax. That's right, not one single dime of taxation at all. How? It's simple. It's a strategy that I call "The IRA Tax Rescue Trust".

If you would like to discuss how to save taxes on your retirement plan for your spouse, children, or any other beneficiary, feel free to call our office to schedule a complimentary visit