In 2010, tax law allows a conversion of traditional and non-deductible IRAs to a Roth IRA without an income limitation.  There are several benefits to a Roth IRA.  There are no Required Minimum Distribution's (RMD) like traditional IRAs, and Roth IRAs are considered "after-tax", so qualified withdrawals are tax-free*.  One issue you need to consider is that if you convert your traditional IRA to a Roth IRA, the converted amount is generally subject to income taxation. In 2010 only, these taxes can be paid over two years: 2011 and 2012.  Refer to our Roth IRA Conversion calculator on our home page to see if you could benefit from this.

For additional information, please contact our office to discuss whether this might be a financial planning technique that makes sense for you. 

 

As 2009 comes to a close, special attention will be paid to the various tax implications associated with your investments.  Each year there are dividends, interest, and capital gains paid in most investment accounts.  In taxable accounts (Trust Accounts, Joint Accounts, Individual Accounts) we will be attempting to offset the tax liability associated with these distributions by taking "tax losses" when applicable.  In many cases we are able to minimize the tax consequence related to these events.  As a reminder, IRA's, 401k's, and 529 Plans are non-taxable accounts and are not in need of tax harvesting.   If you have any questions or concerns regarding this issue, please contact us.

 

  

Lifetime Financial Advisors, Inc.