Summary: A law signed in 2006 brings changes to Roth IRA law. While the amount you earn to open up a Roth IRA will not change, anyone can open a non-deductible IRA account, contribute to it and convert it to a Roth IRA in 2010. Whether you’re looking at a Roth or traditional IRA, you should never cap the amount you save for retirement.
Q: I have a question about converting an IRA to a Roth? I heard your radio program today (9.17.06) just long enough to hear half an answer!
A man called in, explained that he and his wife make $150,000+ and are not eligible for the Roth IRA. You advised him to open a traditional IRA, and then convert it to a Roth in 2010.
Why 2010? Is there a new law or other standard in effect? My husband stays at home, I work, but our $150,000+ income makes investing in retirement funds a bit of a challenge!
Can you explain the conversion idea further? And should we cap an IRA at a certain dollar amount?
A: In the new pension bill that was signed into law in May 2006 by President Bush, there are changes to the Roth IRA law. While the amount you earn to open up a Roth IRA will not change (opening a Roth IRA is disallowed for anyone earning $160,000+), anyone can open up a non-deductible IRA account, contribute to it with after-tax dollars, and then convert it to a Roth IRA starting in 2010. There will be no income limits for the conversions.
In terms of capping the amount, I always believe you should put away as much cash for retirement as possible.
Please seek the advice of a competent accountant who can explain this law to you in detail.
And, thanks for listening to me on Newstalk 750 WSB.
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(View All Topics)401k IRA IRS Roth IRA credit card debt credit cards ilyce glink income tax investment personal finance personal finance advice retirement save money tax deduction taxes
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