New Rules for Opening or Converting to Roth IRAs

January 1, 2010 is an important date. It signifies when income limits that have prevented many from converting 401ks to Roths will be eliminated.

• Many people make too much money for Roths at the moment. Individuals with an adjusted gross income for 2009 of $120,000 or more can't contribute; neither can couples who make $176,000 or more.
• You aren't allowed to convert traditional IRA assets to a Roth if your household's modified adjusted gross income for 2009 is $120,000 or more. As Ed Slott points out, "A married person who files a separate tax return is prohibited from converting -- no matter how much or how little he or she makes."
• As the article states: "As part of the Tax Increase Prevention and Reconciliation Act enacted in 2006, the federal government is eliminating permanently, starting Jan. 1, the $100,000 income limit for Roth conversions, as well as the restriction on spouses who file separate tax returns."
• There is always the matter of taxes, however. Find out how to handle them and read the rest of the article by CLICKING HERE.

-By Jared Trexler

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