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I was looking for a possible silver lining to the current storm clouds that almost all investors have been weather.
2010 should be an exciting year for investors who save more for retirement (and even those who did in May to start saving again!).
The display below has been originally sent to our customers in mid-2007 – well before the current downturn in the market. If your balance is lower now than it was then This strategy might even make more sense.
Chappell Mayfield and Associates supports being green. So, here's a recycled idea …………..
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Originally sent March 2, 2007
2010: Odyssey Roth
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On May 17, 2006, President Bush signed the tax increase prevention and Reconciliation Act of 2005 (Tipra). The law contains many provisions, however, there is a provision which is one of the most exciting things I remember from my 10 years in this business.
First, let's review:
- Withdrawals from a traditional IRA at retirement are taxed income, withdrawals from a Roth IRA in retirement are not taxed on income (with some limitations – Consult your tax advisor).
- Under current law, a couple (or single for that matter) must have an adjusted gross income of less than $ 100,000 to convert an IRA (or 401k rollover) to a Roth IRA.
Drum roll please …………:
- In 2010 (due to Tipra), we can convert IRA, 401k rollover, and virtually any type of pension plan to a Roth IRA regardless income.
- The rules also allow the taxpayer to apportion the tax on the conversion from the next two years (2011 and 2012)!
"OK". So how will be for me? "
The main advantage of a Roth IRA is that withdrawals are made after age 59 ½, totally tax-free income. In addition, it is not required minimum distribution when you reach 70 ½, as it is with a traditional IRA.
The decision to convert or not convert, will be affected by numerous issues, such as life expectancy and expectations of your tax bracket to retirement. Needless to say we have calculators and other resources to help you make your decision.
"What can I do in the meantime? "
- It is almost always a good idea to maximize retirement savings. This event makes it even more attractive.
- If you are unable to contribute to a Roth now contribute to a traditional IRA …. you can change it in 2010.
- If you have an old 401k drag, do not run automatically in your new 401 (k) at work. Consider rolling over an IRA and funding … can convert in 2010.
- Many 401 (k) plans allow you to refinance your balance, even when working. It may be a good idea to beef up your contributions in perspective 2010.
- Imagine having a pool of money to draw from the pension to which the tax is 100% free!
For some, this May 2008, even an impact on your taxes. There is still enough time to have a substantial impact on your retirement savings 2010 – and beyond.
About the Author:
As co-founder of Chappell, Mayfield & Associates, Cass offers expertise in financial planning, wealth accumulation, retirement planning, insurance planning, business continuation planning, and employee benefits.
Cass launched his financial planning career as an agent for Prudential Financial in 1996, and later, a manager in the company’s financial services division. Since then, Cass has earned the CFP®, CLU, and ChFC designations, reflecting his commitment to excellence in investment decision-making and financial planning. He also holds a B.S. in Management from Georgia Tech.
Cass has lived in Atlanta since 1992 and is married to Alison.
Article Source: ArticlesBase.com – Roth Ira Conversions
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