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Merlo
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Category: Tax
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Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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I have a tradional IRA of approximately $200,000. I am 80

Resolved Question:

I have a tradional IRA of approximately $200,000. I am 80 years of age and file a joint tax return.
My question is: What, if any, restrictions or limitations are there for me to roll over some part of the traditional IRA into a Roth IRA???
Submitted: 4 years ago.
Category: Tax
Expert:  Merlo replied 4 years ago.

Hello JA Customer,

 

Before the 2010 tax year, there were limitations on how much income you could have before you could convert part or all of your traditional IRA to a Roth account. However for the 2010 tax year those restrictions have been lifted. So you could convert the entire $200,000 to a Roth if you choose to do so.

 

You are correct that the amount you withdrew in June must be redeposited to a Roth within 60 days. If you wish to transfer additional funds to a Roth account, you should simply have the custodian of your traditional IRA account transfer the funds directly to the Roth account.

 

For the 2010 tax year the IRS is allowing taxpayers a choice on how to handle the taxes on these conversions.

 

1. You can either pay the tax due on any conversions you make in the 2010 tax year all at one time when you file your 2010 tax return OR

 

2. You can delay payment of the taxes due on the conversion to the years 2011 and 2012. You would report 50% of the total conversions you made in 2010 in each of the tax years 2011 and 2012 and pay taxes in those two years.

 

Choosing option #2 would allow you a longer time to pay the taxes that will be due and will also help keep you in a lower income tax bracket for each of the years where you would be paying the taxes.

 

If this was helpful please press the Accept button. It is the only way we receive any credit for helping with these questions.

 

Thank you JA Customer

 

 

Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Merlo and other Tax Specialists are ready to help you

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