Roth IRA Conversions: Opportunities and Deadlines
With
the possibility of federal income tax increasing soon, a 2012 Roth conversion may
be an attractive option. When you
convert a traditional IRA to a Roth IRA, the conversion is generally taxed as
ordinary income (except for any after-tax, nondeductible contributions you've
made). With the "Bush tax cuts" set to expire at the end of 2012,
federal income tax rates will jump up in 2013. Unless Congress acts, we'll go
from six federal tax brackets to five. While
there continues to be discussion about extending the expiring tax cuts, many
believe there's little chance of resolution until after the November election.
