Roth conversion
Clients file jointly and combined income is approx. $145,000 with out any deductions.
Can they convert her IRA, worth 45K to a Roth-IRA in 2009 or does this push them over some kind of limits or IRS rules?
Reason: her IRA was worth $65,000. If we convert her IRA in 2009 (100% taxable for 2009 tax year), then we can covert his IRA, worth 100k, in 2010 and pay taxes over two years.
Thanks,
Doug
Permalink Submitted by Alan Spross on Wed, 2008-12-10 19:21
The maximum allowed modified AGI figure is 100,000 until 2010, so a 2009 conversion is not possible for either of them unless their 2009 income dropped considerably.
Starting in 2010, the income limit disappears and they could either convert an incremental amount each year starting in 2010 opting to pay the tax each year, or convert a larger amount in 2010 and use the 2 year deferral. The problem with the two year deferral is that none of the marginal tax bracket at all for 2010 is used.
With both spouses having IRAs, it is possible that one opts for the two year deferral on their conversions and the other spouse does not and reports their conversions each year.