IRA Rollover

Question: Roth IRA Conversion in 2010 – Federal and State Tax?

Let’s say I have $20,000 in Traditional IRA. In 2010, if I rollover entire amount to Roth IRA, am I taxed as ordinary income of $10,000 each in 2011 and 2012? What about in 2010?

Does the same rule apply to state taxes? I’m in California.

Answer: Dear vid..: You are right on, 2010 will have a pass, unless you make an election to report it all in 2010. This is a new law and remember also the $100,000 AGI restriction goes away in 2010. This presents a great opportunity for some interesting tax planning strategy’s with respect to income for the tax years 2011 and 2012 and your projected income for those years. Nice catch on the new law!! Yes ordinary income and CA generally follows the Federal. This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provide. Click on my profile to read more.
Errol Quinn Enrolled Agent Master Tax Advisor

Roth IRAs in 2010 Part 3

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