Conversion Rule Changes For 2010 For The Roth IRA Plan
Up until now, the Roth IRA plan was subjected to what is known as an income test. This meant that if you earned more than $100,000 a year, you could not contribute to a Roth IRA. If you held a normal IRA and you earned more than this amount, a Roth IRA was not open as a potential alternative for you to consider.
But in 2010 this restriction will be removed. As soon as January gets underway, you can transfer your normal IRA plan into a Roth IRA plan if you wish. And if you earn more than $100,000 a year this is an option that was previously denied to you.
The changes made to the law back in 2006 now mean that the Roth IRA plan can continue to be offered in 2010. If the law changes had not been made this would not have been the case.
It has been pointed out that the situation could change back again at any time if the government wished to do so. But in reality experts think this won't happen, at least not in the near future. The more people who convert their traditional IRA plan to a Roth IRA plan, the better the government does regarding tax receipts, so it wouldn't benefit them to change it back again.
This change gives everyone who earns more than $100,000 more choices as to which IRA plan to contribute to. Those who have been restricted from converting their current plan into a Roth IRA may choose to exercise their new freedom to do so early in 2010. Similarly as they could not contribute to this plan in the past they may not start to do so.
Of course your own individual situation should always be borne in mind first. You should take proper advice to make sure your retirement fund is in the best place for you. It may also depend on your marital status, as different limits are in place for married couples than for single people.
You can see though that the new change looks promising for many high earners. It won't affect those who earn less than $100,000 a year, but if you happen to fall into that higher income bracket, now is the time to consider your next move. From January onwards you will have better choices available to you - so think about whether you should take them.
But in 2010 this restriction will be removed. As soon as January gets underway, you can transfer your normal IRA plan into a Roth IRA plan if you wish. And if you earn more than $100,000 a year this is an option that was previously denied to you.
The changes made to the law back in 2006 now mean that the Roth IRA plan can continue to be offered in 2010. If the law changes had not been made this would not have been the case.
It has been pointed out that the situation could change back again at any time if the government wished to do so. But in reality experts think this won't happen, at least not in the near future. The more people who convert their traditional IRA plan to a Roth IRA plan, the better the government does regarding tax receipts, so it wouldn't benefit them to change it back again.
This change gives everyone who earns more than $100,000 more choices as to which IRA plan to contribute to. Those who have been restricted from converting their current plan into a Roth IRA may choose to exercise their new freedom to do so early in 2010. Similarly as they could not contribute to this plan in the past they may not start to do so.
Of course your own individual situation should always be borne in mind first. You should take proper advice to make sure your retirement fund is in the best place for you. It may also depend on your marital status, as different limits are in place for married couples than for single people.
You can see though that the new change looks promising for many high earners. It won't affect those who earn less than $100,000 a year, but if you happen to fall into that higher income bracket, now is the time to consider your next move. From January onwards you will have better choices available to you - so think about whether you should take them.