Starting in 2010, ROTH IRA conversions from traditional IRAs will be available to all taxpayers regardless of income. Under the new law, taxpayers who convert in 2010 can also elect to pay the federal income tax due in two equal installments over the following two years.
Roth IRAs may be appealing to retirees because they offer tax-free withdrawals and minimum distributions are not required during the account owner’s lifetime. However, it may not be beneficial to convert to a Roth IRA unless other funds are available to pay the taxes. If you need to use some of the assets in the IRA to pay the taxes, this could trigger an early withdrawal penalty on those assets and create an even greater tax burden.
An SMCU investment advisor can help. To schedule a complimentary consultation, please call the SMCU Investment Center at 650-562-1250.
Investments offered through CUSO Financial Services, L.P. (CFS) are not NCUA/NCUSIF insured, are not credit union guaranteed and may lose value. Investment representatives are employees of San Mateo Credit Union and registered through CFS. San Mateo Credit Union is affiliated with CFS (member FINRA/SIPC)
For Specific tax advice, please consult a qualified tax professional.
