Posted on October 18, 2006 at 17:35:35:
Right now, no one – married or single – with modified adjusted gross income over $100,000 can convert an Individual Retirement Account to a Roth IRA. But that’s going to change.
Starting in 2010, anyone, regardless of income, can convert a conventional IRA to a Roth. Income taxes will be due on the amount being transferred, but the new law permits that income reporting to be spread out, half to 2011 and half to 2012. Thereafter, the money in the Roth grows tax-free. There are no mandatory payouts at 70 ½, so funds can be left to heirs who then would have a lifetime to withdraw them.
Reputable experts say that those who convert stand to save $3,500 for every $1,000 paid in conversion taxes. They also suggest that the taxes be paid from outside funds, so the full IRA account can be rolled over. (Note: if you contribute to a nondeductible IRA now, you can get an early start on the Roth bonanza.)