the 2 conversion options offered in 2010
Suppose both spouses converted money in 2010 , have not filed yet ( but will before the Oct ‘ 11 deadline ) but definitely know that 1 of the spouses will have ALL their conversion applied to 2010 and the other spouse
will elect the 2011 and 2012 split option ( or whatever it ‘s called ) .
1. Is the spouse going with the split option for 2011 and 2012 prevented from additional conversions for both 2011 and 2012 ? Locked out til 2013 ?
2. Can the spouse going with all conversion dollars applied to 2010 income convert more now and up until 12/31/2011 …… and , of course , pay the taxes for 2011 based on whatever bracket these additional dollars fall in ?
I think I know but need the experts to take all doubts away .
Thanks so much
Hope you ‘re doing well Alan
Permalink Submitted by Alan Spross on Fri, 2011-08-19 17:31
Newt,
1) No lockout. Any 2011 or 2012 conversion would be added to the respective 50% of the 2010 conversion income for those years. With the market selloff, we will probably see many recharacterize the 2010 conversions and reconvert in 2011 to eliminate the tax bill on values that have declined.
2) Same with the other spouse, who can continue to convert in each year.
Many people doing incremental conversions to avoid spilling over into a higher bracket would be inclined to opt out of the 2010 deferral, and just do conversions in every year like they would have without the special 2010 provisions.
Permalink Submitted by Newt Pearson on Fri, 2011-08-19 21:53
ALAN
Thanks as always . Hope you have been doing well since our last contact . Glad I wrote in because I had point 1 wrong and your reply opens up some options I had not previously seen . Will make a big difference in my decisions going forward . Under the timing and value of my particular stock purchases I can also see the both of us are better off just
converting annually .
Thanks again for coming through . You are 1 dedicated , persevering fellow and a bright spot in a declining humanity .