Ira conversion in 2010…I Think I’m Confused
We are unable to convert due to income over the limit.
Have been under impression that 2010 was the only window of OPP
we might have if income restrictions continued after 2010…
1. Under the present law/rules , will we also have OPP to convert after 2010
irregardless of income? Is it actually on the books for now?
2. For how many years into the future?
3. What are the experts’ guesses as to whether conversions will truly continue to be possible
irregardless of income after 2010 ?
4. Are the current tax brackets guaranteed for 2009 or 2010 and how does and when do the new income tax brackets become effective ? Can they just drop a new schedule anytime or is there some general time frame in which we have a warning of what will come and when.
Permalink Submitted by Alan Spross on Sun, 2008-05-18 02:23
1) The income limit for conversions goes away after 2009 for all subsequent years. This provision was part of TIPRA, passed in 2006.
2) No limit. However, the deferral of the conversion tax to the next two years only applies to conversions for 2010. For other years, the income is reported fully in the year of the conversion.
3) Excellent chance as long as the Treasury is hurting for tax revenue. There is no sign of the discipline needed to change that. Conversions will accelerate the collection of income tax.
4) The current bracket rates expire 12/31/2010, but there is no guarantee that Congress will not tinker with them starting in 2009. If they are allowed to expire in 2010, it may pay to opt out of the deferral for 2010 conversions and report the entire conversion in 2010. A taxpayer who is going incremental conversions each year would also opt out so that they could utilize their tax bracket in 2010.
Not only is there no guarantee of any lead time for tax changes, in recent years Congress have been extending provisions and patching the AMT around November. That makes tax planning very difficult, forcing taxpayers in many cases to “bet” on what Congress is going to do. The Presidential election will have a major effect on these “bets”.
Permalink Submitted by Newt Pearson on Sun, 2008-05-18 04:05
Alan, thank you again
You are a wonderful person with lots of valuable info which all of us appreciate.
You help making decisions that we struggle with much easier .
The only thing I’m confused about … Who exactly are you? How have you acquired
your insight , wisdom and knowledge? Why are you so helpful ? How are you able to communicate so clearly ? You are a very special person that intrigues me .
Enough of that…but a great big, thank you sir!!!!!
I wish you well and have a great nite , weekend , and the best to you forever.
In a world where I see most with not so good motives
and selfish angles…and then I am fortunate to run across you .
Very , very refreshing and encouraging !!!!
Thanks Again
Permalink Submitted by Janine Janine on Sun, 2008-05-18 14:32
I sincerely agree with all of the above.
Merci bien!
Janine
Permalink Submitted by [email protected] on Tue, 2008-05-20 15:17
I have to agree, also! Every question I’ve read has an answer from alan! Great, easy to understand answers!! Thank you!