2 separate Roth IRA’s – split taxation ?
If I have established a Roth IRA and Funded it with a partial IRA conversation, can I establish a new separate Roth IRA make another partial IRA Conversation; then on Roth IRA #1 pay tax on 2010 return and on Roth IRA #2 split tax liability between 2011 and 2012?
Permalink Submitted by Alan Spross on Mon, 2010-12-20 23:11
No. While you can do as many partial Roth conversions into as many different Roth accounts as you please, you must make the same decision with respect to reporting on all of them, ie defer all to 2011 and 2012 or opt out and report them all in 2010. If you are married and spouse can also convert, you can make a different election than the spouse makes.
Sometimes it is better to use the tax bracket for all 3 years and beyond by doing incremental conversions. In that case, you would ignore the special rules in 2010, do your conversion and opt out of the deferral, then continue to do separate conversions in 2011 and beyond. The best course depends on your individual tax situation, but at least we now know that marginal rates will stay the same until the end of 2012.