Is Senator Roth your new best friend?
July 24, 2007

Q: Is Senator Roth your new best friend?

A: As of 2010 he may be. It is in that year that the income caps for conversion of your traditional IRA to a Roth IRA disappears. Currently the cap is a modified adjusted gross income of $100,000. In 2010 you'll have the opportunity to spread the tax on the conversion over a two year period. Remember, you do not have to convert your entire IRA. You can elect to open a second IRA account and transfer a small portion of an existing IRA into the new account. You could then elect to convert the smaller IRA account to a Roth IRA. Consider your comfort level and the tax effects. Suppose you don't have an IRA but do have a 401(k)? Consider rolling a portion into an IRA and then execute the plan.