IRA Rollover

Archive for September, 2008

Question: 2010 Roth IRA rollover?

I have rollover 20K (before tax) from 401K to IRA. In 2010, I would like to rollover that amount to Roth IRA. Do I have to pay tax for that amount?

Answer: The full amount of a Roth IRA rollover is taxable, regardless of your age. There is a special rule for 2010 rollovers, however, under which you can elect to delay paying the tax by declaring half the rollover as taxable income in 2011 and half in 2012 (instead of all in 2010). People planning to use this provision are holding their breath in fear that Congress will change the law before then, or will increase the tax rates for 2011 and 2012 so high that the election becomes useless.

Roth IRAs in 2010 Part 1