2010 Roth IRA conversion rules
Regarding the option to rollover Traditional IRA’s to Roth IRA’s in 2010. Are there any rules as to how much has to be moved? Can client move part of their Traditional IRA? Can client transfer non-deductable IRA and not their Traditional IRA?
Permalink Submitted by Alan Spross on Thu, 2008-05-29 20:34
As is the case today, in 2010 a taxpayer can convert as much as they wish to a Roth IRA, although partial conversions assist in avoiding large increases in taxable income that will inflate the marginal bracket. There is also no limit to the number of conversions that can be processed in a calendar year.
The pro rate rules continue to apply to non deductible contributions or after tax rollovers in IRA accounts documented on Form 8606. Any distribution or Roth conversion is tax free based on the percentage of basis in all traditional, SEP or SIMPLE IRA accounts. Therefore, it does not matter which account the conversion comes from as the tax impact will be the same. What is unique in 2010 only is the ability to defer conversion income equally to 2011 and 2012, which provides considerable deferral of the tax bill.