If a taxpayer coretnvs his or her IRA and then dies, the amount of conversion income not previously reported, will be included in the decedent’s final tax return. However an exception is made if the Roth IRA is inherited by the spouse. If the spouse so elects, the spouse can continue to report the conversion income on the same schedule as the decedent would have. This election cannot be made or rescinded after the due date of the spouse’s tax return for the year of the decedent’s death. Roth IRA Conversion AdvantagesThe 2010 Roth IRA conversion may prove beneficial for a number of investors. Assuming tax rates do not drop significantly in the future, the conversion makes a lot of sense. The main advantage of the Roth IRA is its very favorable tax treatment when it comes to distributions. These qualified distributions are tax free, of course, but there are some other Roth IRA conversion benefits:There is no Required Minimum Distribution (RMD) during your lifetime.An IRA conversion to Roth IRA will require the payment of any necessary taxes, but will assist in shrinking your taxable estate. This provides you the opportunity to bequeath the select Roth funds tax free to your heirs.You can choose to not pay taxes on the conversion in 2010 and postpone the taxes in equal shares until 2011 and 2012. Normally, you’d be required to pay all taxes in the year of the conversion.Obviously, the primary advantage of the Roth IRA is its tax-free nature. Having investment earnings completely free from taxation is alluring, but the two following Roth IRA rules must be met in order to receive tax-free distributions:1. The withdrawal takes place at least five years after the initial Roth contribution, and2. One of the following applies:a. The Roth IRA owner is 59 bd or olderb. Disability (permanent)c. Death of participantd. First-time home purchase ($10,000 lifetime cap)
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Besides swissmiss, Tina founded and runs TeuxDeux, CreativeMornings and her Brooklyn based co-working community Friends Work Here. (She also started Tattly which was recently adopted by BIC)
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If a taxpayer coretnvs his or her IRA and then dies, the amount of conversion income not previously reported, will be included in the decedent’s final tax return. However an exception is made if the Roth IRA is inherited by the spouse. If the spouse so elects, the spouse can continue to report the conversion income on the same schedule as the decedent would have. This election cannot be made or rescinded after the due date of the spouse’s tax return for the year of the decedent’s death. Roth IRA Conversion AdvantagesThe 2010 Roth IRA conversion may prove beneficial for a number of investors. Assuming tax rates do not drop significantly in the future, the conversion makes a lot of sense. The main advantage of the Roth IRA is its very favorable tax treatment when it comes to distributions. These qualified distributions are tax free, of course, but there are some other Roth IRA conversion benefits:There is no Required Minimum Distribution (RMD) during your lifetime.An IRA conversion to Roth IRA will require the payment of any necessary taxes, but will assist in shrinking your taxable estate. This provides you the opportunity to bequeath the select Roth funds tax free to your heirs.You can choose to not pay taxes on the conversion in 2010 and postpone the taxes in equal shares until 2011 and 2012. Normally, you’d be required to pay all taxes in the year of the conversion.Obviously, the primary advantage of the Roth IRA is its tax-free nature. Having investment earnings completely free from taxation is alluring, but the two following Roth IRA rules must be met in order to receive tax-free distributions:1. The withdrawal takes place at least five years after the initial Roth contribution, and2. One of the following applies:a. The Roth IRA owner is 59 bd or olderb. Disability (permanent)c. Death of participantd. First-time home purchase ($10,000 lifetime cap)
Dec 27th, 2014 / 9:28 am