Your Tax Questions Answered
Rolling into a Roth
Kiplinger editorial director Kevin McCormally and fellow tax experts Peter Blank and Mary Beth Franklin tackle your most pressing tax challenges.
By Kevin McCormally, Editorial Director, Kiplinger.com
December 10, 2009
QUESTION:
The income limit for rolling over my IRA goes away in 2010, so I plan to roll over to a Roth the 1st week of Jan 2010. I was 70 in August 2009 so my 70 ½ age date is Feb 2010. As I will be rolling over to a Roth before my 70 ½ age date must I take the first distribution?
KEVIN ANSWERS:
Minimum distributions are required for the year you reach 70 ½, not after you reach age 70 ½, so you will have a required minimum distribution for 2010. And, the way the rules work, the first money out of an IRA in the year an RMD is required is considered the RMD … so you can’t roll that amount into a Roth as part of the conversion. This won’t affect your tax bill for the year – since both the RMD and the converted amount will be taxed – but it will leave less in your Roth.
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Reader Comments (8)
Posted by: Leslie at 12/13/2009 04:02:09 PM
With the changes to the Roth IRA rules in 2010, is it possible to roll an Inherited IRA into a Roth IRA, paying the taxes on the amount converted during 2010? Is it ever possible to roll an Inherited IRA into a Roth IRA?
Posted by: Ray N at 12/16/2009 04:29:33 PM
Is it worth while rolling money from your traditional IRA to a Roth IRA if you are 78 years of age?
Posted by: gman at 12/29/2009 04:42:45 PM
i purchased a home in 2002 since than i have refinanced twice would i be able to recieve the new tax credit of $6500 ? thanks for your answer
Posted by: K. Greenfield at 01/06/2010 08:18:12 AM
My company is ending a Deferred Compensation Plan [DCP] which is Unqualified and distributing the proceeds in cash and company stock in 2010. What would my tax liability be for the distribution?
Posted by: Jim Ware at 02/12/2010 12:05:53 PM
I am 75 and fully retired. I am considering converting portion of my substancial IRA to a Roth IRA. The tax cost of such a conversion would be 25 to 28%, depending on how much I chose to convert. None of the articles I read consider this situation for those of us already retired, taking required minimun distributions, and having over a million in an IRA. Any advise?
Posted by: tamy at 02/22/2010 04:18:40 PM
Closed on our house 12-12-08 and refinanced this past summer in 09 are there any types of tax credits avalible? We owned our previous home for 5yrs. Is there a way to get the moving up credit?
Posted by: PHIL EDWARDS at 03/27/2010 05:30:02 PM
Am I correct in saying that if I roll a traditional IRA into a Roth in 2010 that I will not report any income on my tax returns until 2011(1/2) and 2012(1/2). I think I can opt out and report the entire rollover on my 2010 return but I prefer to split it on my 2011 and 2012 returns if that is allowed. So I don't have to report anything on 2010 unless I opt out ?
Posted by: Matt at 04/04/2010 10:19:49 PM
because of a large hospital bill,( no benefits)and the risk of a bad blemish on my credit,I had to cash in a 401k I had with Fidelity. Was this a good decision? I did not deduct the taxes.I have not yet cashed the check. Thanks