Roth Conversions in 2010
If a client wants to convert a traditional IRA to a Roth next year in order to spread the taxes into 2011 and 2012, must they convert all of their IRA accounts, or can the convert only one? They have 3 traditional IRAs at different custodians, but can only afford to pay the taxes on converting the smallest one.
Permalink Submitted by Joseph Arsenault on Mon, 2009-06-15 20:46
Kathy,
Yes, they can use the smaller IRA alone. They can also use a portion of another larger IRA.
Any amount can be converted, then you can elect to recognize that income in 2011 and 2012. It is not required that all Traditional IRAs be converted, and if the client wants to, they could do a partial conversion from one Traditional to a Roth and elect to defer that income recognition like you mentioned. If the clients have any after tax basis in their Traditional IRAs, this may be something to look at as well when deciding how much to convert.
J