Category Archives: ROTH IRA

Convert to a Roth IRA in 2010 and Take Advantage of the Special Two Year Option

By Stacie Clifford Kitts, CPA

Did you know that beginning on January 1, 2010, just about anyone will be able to convert (roll your retirement account) to a Roth IRA: Here’s what you can convert:

    • a traditional individual retirement arrangement (IRA), SEP IRA or SIMPLE IRA; or
    • an eligible rollover distribution (ERD) from your or your deceased spouse’s employer-sponsored retirement plan (for example, a 401(k) or a 403(b) plan).

Prior to January 1, 2010, you could only convert to a Roth IRA if your AGI (modified adjusted gross income for Roth IRA purposes) was $100,000 or less and you were not married filing separately.

Also, remember, there will be a tax consequence to your conversion. If you roll over or convert to a Roth IRA, the previously untaxed amounts must be included in your gross income.

However, for tax year 2010, there will be a special 2-year option that will apply to your conversion. Unless you elect to include the entire taxable converted amount in your 2010 income, you can report half in 2011 and half in 2012.

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