Stock Gloom & Roth IRA Opportunities

Posted on 09.16.11

Stock Gloom and Roth IRA Opportunity Planning

There may be a window open right now for a timely Roth conversion or a recharacterization of a prior Roth conversion made in calendar year 2010. The reason is that doing a conversion now may be far cheaper from a tax standpoint than it was just a few weeks ago. Obviously, converting assets within a traditional IRA into a Roth requires paying taxes on the amount to be converted. Since the market has been hammering assets, including those within traditional IRAs, the tax cost has also been reduced.

An investor in the 33% tax bracket would owe $33,000 on a $100,000 conversion, but if the market reduced those assets to $75,000, the tax burden would fall as well, to $24,750 in this example.

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The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.

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