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Subject Author Date
Another Roth conversion question Perplexed 11-19-2006
Posted by Perplexed on November 19, 2006, 10:14 pm
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 DH is 68. We live in a state with no income tax but will be
moving in a couple years to one with an income tax. I am
considering moving some of his regular IRA money to his
Roth. Our current tax bracket is 15%.

Somewhere I heard that the Feds were going to offer another
3-year averaging for Roth conversions? If true could you
link me to the details?

Along that line, when a Roth is converted are the taxes to
be paid in the quarter the conversion happened or at the
time the return is filed (no sense getting an underpayment
penality).

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Posted by Harlan Lunsford on November 20, 2006, 10:47 pm
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 Perplexed wrote:

> DH is 68. We live in a state with no income tax but will be
> moving in a couple years to one with an income tax. I am
> considering moving some of his regular IRA money to his
> Roth. Our current tax bracket is 15%.

I don't know who DH is, but only he can move his IRA money
into a ROTH account. (IOW, it's not your decision.)

> Somewhere I heard that the Feds were going to offer another
> 3-year averaging for Roth conversions? If true could you
> link me to the details?

First I've heard of this and I kinda doubt that the feds
will be generous again. In fact I'm surprised that congress
hasn't closed the "loophole"; but then again, I'm really
happy they haven't. Yet.

> Along that line, when a Roth is converted are the taxes to
> be paid in the quarter the conversion happened or at the
> time the return is filed (no sense getting an underpayment
> penality).

Should be paid for that quarter in order to avoid penalty.

ChEAr$,
Harlan Lunsford, EA n LA

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Mark Bole on November 23, 2006, 1:53 am
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Harlan Lunsford wrote:
> Perplexed wrote:

>> DH is 68. We live in a state with no income tax but will be
>> moving in a couple years to one with an income tax. I am
>> considering moving some of his regular IRA money to his
>> Roth. Our current tax bracket is 15%.

> I don't know who DH is, but only he can move his IRA money
> into a ROTH account. (IOW, it's not your decision.)

"Deceased Husband"? "Designated Hitter"?

>> Somewhere I heard that the Feds were going to offer another
>> 3-year averaging for Roth conversions? If true could you
>> link me to the details?

> First I've heard of this and I kinda doubt that the feds
> will be generous again. In fact I'm surprised that congress
> hasn't closed the "loophole"; but then again, I'm really
> happy they haven't. Yet.

As the law stands today, I recall that tax on Roth
conversions can be spread over two years beginning in 2010,
in conjunction with the elimination of AGI limitations for
conversions. Some people might start making maximum
non-deductible Traditional IRA contribtions every year until
then to maximize the amount they can convert.

-Mark Bole

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by joetaxpayer on November 23, 2006, 1:53 am
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Harlan Lunsford wrote:
> Perplexed wrote:

>> Somewhere I heard that the Feds were going to offer another
>> 3-year averaging for Roth conversions? If true could you
>> link me to the details?

> First I've heard of this and I kinda doubt that the feds
> will be generous again. In fact I'm surprised that congress
> hasn't closed the "loophole"; but then again, I'm really
> happy they haven't. Yet.

Sounds like the OP is confusing the first year of Roth (was
it five years the conversion was spread out for tax
purposes?) and the 2010 conversion in which the income may
be spread over two years (2011 and 2012 tax returns).

JOE
JoeTaxpayer.com

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Phil Marti on November 23, 2006, 1:53 am
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> DH is 68. We live in a state with no income tax but will be
> moving in a couple years to one with an income tax. I am
> considering moving some of his regular IRA money to his
> Roth. Our current tax bracket is 15%.
>
> Somewhere I heard that the Feds were going to offer another
> 3-year averaging for Roth conversions?

It's a two-year spread for conversions done in 2010 only.
The income is spread between 2011 and 2012 [sic] unless the
taxpayer elects to have the entire amount taxed in 2010.

Don't count on this still being law in 2010. On the surface
it sounds like you'd be best off to convert enough each year
to use up the 15% bracket. Before you do, check your future
state's treatment of retirement income. For example,
Illinois has an income tax but doesn't tax retirement
distributions, including conversions to Roth.

--
Phil Marti
Clarksburg, MD

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

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