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Posted by Bill on June 19, 2008, 6:40 pm
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TP is over 70, taking RMDs -- but has substantial assets in Traditional
IRA. At the same time, 2007-2008 nosedive in Bank stocks has created
significant decline in IRA value.
Three questions:
First, is conversion from Trad to Roth still OK when over 70 and taking
RMD?
Second, does the "conversion" count as part of RMD?
Third, is it possible to transfer stock directly from Traditional IRA to
Roth IRA -- using current valuation on day of transfer (NYSE Avg Trade
presumed) as the basis for amount of conversion? The alternative would
be to sell stock, converting to cash, and then buy same stock in Roth --
but that would presumably raise possible "Wash Sale" issues.
Bill
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Posted by joetaxpayer on June 19, 2008, 7:12 pm
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Bill wrote:
> TP is over 70, taking RMDs -- but has substantial assets in Traditional
> IRA. At the same time, 2007-2008 nosedive in Bank stocks has created
> significant decline in IRA value.
>
> Three questions:
>
> First, is conversion from Trad to Roth still OK when over 70 and taking
> RMD?
>
> Second, does the "conversion" count as part of RMD?
>
> Third, is it possible to transfer stock directly from Traditional IRA to
> Roth IRA -- using current valuation on day of transfer (NYSE Avg Trade
> presumed) as the basis for amount of conversion? The alternative would
> be to sell stock, converting to cash, and then buy same stock in Roth --
> but that would presumably raise possible "Wash Sale" issues.
Ok? It's fantastic!! Yes, I need to get out more, but I will first tell
you that I believe that Roth's value while working is slightly
exaggerated. Your scenario above is ideal. I have an 80+ yr old woman
who is in the 15% bracket. Each year we convert just enough to 'top off'
that bracket so the next hundred dollars would have been taxed at 25%.
No, the conversion must take place after you calculate the RMD. Our RMD
is based on 12/31/07 year end balance. We can do the Roth conversion any
time during the year, but that RMD is fixed.
Yes - you can convert stock, the broker will report that value based on
the day of conversion. There is no wash sale selling in one IRA and
buying in another, anyway.
This strategy helps reduce the ever increasing RMDs as the converted
amount is not in the account at year end. Reduces taxes by letting you
use my 'top off' strategy. And saves the kids/beneficiaries a bucketload
of money. Please, please confirm that TP has beneficiaries listed on the
IRA account(s). IRAs should have their beneficiaries listed for proper
transfer, a will is not enough. This is one of the top planning mistakes
I see out there. See http://www.fairmark.com/refrence/index.htm to
understand the bracket TP is in and how you can strategize for him/her.
Joe
--
<< ------------------------------------------------------- >>
<< 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 (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by joetaxpayer on June 19, 2008, 8:16 pm
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joetaxpayer wrote:
> Ok? It's fantastic!!
Forgive me, all, in my enthusiasm, I failed to mention that for
conversion in 2008 or 2009 Modified Adjusted Gross income must be less
than $100K. So for a really large IRA, the RMD plus other income may put
MAGI over $100K. In 2010 this rule is eliminated.
Joe
--
<< ------------------------------------------------------- >>
<< 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 (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by removeps-groups@yahoo.com on June 19, 2008, 10:21 pm
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> than $100K. So for a really large IRA, the RMD plus other income may put
> MAGI over $100K. In 2010 this rule is eliminated.
If Obama is elected, there's a good chance the 2010 rule will be the
same as 2009.
--
<< ------------------------------------------------------- >>
<< 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 (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by joetaxpayer on June 19, 2008, 11:32 pm
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removeps-groups@yahoo.com wrote:
>
>
>>than $100K. So for a really large IRA, the RMD plus other income may put
>>MAGI over $100K. In 2010 this rule is eliminated.
>
>
> If Obama is elected, there's a good chance the 2010 rule will be the
> same as 2009.
Staying away from any show of political bias, I still find this
statement odd. The ability to deposit to a Roth is the ability to avoid
taxes on the funds deposited indefinitely. But a conversion is revenue
to the government now. And especially since a single with $100 MAGI is
in the 28% bracket (Joint is 25%), the 2010 rule is not a handout but a
revenue raiser. A voluntary one at that.
But to your point, any answers here are based on the current tax code
and those laws that are in place for future years, which of course, are
subject to change.
Joe
--
<< ------------------------------------------------------- >>
<< 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 (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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