Multiple roth conversions, different tax treatment
Let’s say I have a client who has 2 IRAs. The first is worth 50k and the second is worth 100k. The client converts both IRAs in 2010. Can the client pay the tax on the 50k IRA conversion this year and spread the tax impact of the other conversion over 2011 and 2012? What if the proceeds were in one IRA but the client did two partial conversions at different times in 2010. Essentially does each conversion event stand on its own or are conversions aggregated for the year.
Thanks
Permalink Submitted by Alan Spross on Tue, 2010-09-28 22:49
All conversions of any individual must elect the same tax option for 2010, either all of them reported in 2010 or all of them reported equally in 2011 and 2012.
If the client is married and both spouses have accounts that can be converted, each spouse can make a different election regarding the tax treatment. That would enable the couple to use the tax brackets for all 3 years on their joint return.