What is a 2010 Roth IRA Conversion?

By Mika Hamilton

If you are like many people you still don't really know about the rules and are not sure what the 2010 Roth IRA Conversion is all about and how it will affect you. The IRA conversion is not as complicated as you think, but it is the taxes and the rules that accompany them that make the process of conversion such an annoying one. The results though most times will make you happy and it is just the process that is feared. Here we will try to give you a little information to help you understand what it's all about.


Income Limits. If you are by yourself or with your spouse they have adjusted the gross income level to $100,000.

Even though you will convert during 2010, the income you want to claim can be postponed to 2011 or 2012. You now have the option (thanks to the IRS) to claim half of the IRA conversion as income in 2011 and the other fraction in 2012. This is just for 2010 however so if you want to take advantage of this you have to convert this year.

Keep in mind that if you choose to do it in the way it is explained above you will have to pay the rate differently for each year. So if you have an increase in income in any or both of those years the amount of tax you will have to pay will increase and vice versa.

Even though the IRA conversion limit has been lifted the income restrictions for new contributions to Roth have not. Even though the conversion limit of $100,000 adjusted gross income is lifted, the income restrictions for new contributions into the Roth have not been lifted.

You can convert your traditional IRAs and Old 401(k)s or any other pension fund or plan from your previous employers. Be careful though as the tax rules are sometimes very complicated. If you can, enlist the help of a professional advisor on this matter.

The amount that you will have to pay tax out of is the specified amount being converted so if your 401(k) to be converted is worth $45,000 and you want to roll it over into an IRA that values 25,000, it is this 25,000 that you will be taxed on.


IRA conversion can seem very complicated but it is in fact not quite so complicated in and of itself. It is the tax rules that make things complicated and have you tearing out your hair. For the 2010 conversion there were a couple changes with one of the biggest being the lifting on income limits to $100, 000. A lot of persons will benefit from this aspect of the conversion if they act now if they haven't already done so. Bear in mind though that income restrictions on new contributions haven't changed so you may not be able to make any new contributions. If you haven't converted yet you should get to it before the year ends as we don't know what will be in store for 2011.

For more information and resources or to about how to get started with a   Roth IRA Visit our website at: http://www.yourrothiraguide.com

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