Issue 4.10
When looking back on my life, I can see just how much I’ve learned. I remember when, as a strapping young man, I stepped into the “real world” known as college. To be honest, I expected to learn everything I would ever need in life and then I’d move on to my career and be a very happy, successful man. The truth was, I went through an overwhelming transformation and learned that education, whether formal or not, was very important to me.
After leaving college, I discovered that my education wasn’t over. My passion for learning is what has helped me serve you more efficiently – and I can always learn more! When I began my career as a financial advisor in 1983, I soon found out that the economy and the financial laws changed so often that keeping up with them could be a full-time job in and of itself.
One such law, which was approved a few years ago, has just taken effect at the beginning of this year. I’ve been surprised at just how many people are unaware of this great opportunity that may greatly affect their taxes. This law, which is only available in 2010, is regarding converting IRAs to Roth IRAs. The best part about the law change for 2010 is that on top of added benefits for converting your IRA, anyone is able to take advantage of this opportunity regardless of income.
Roth IRAs, unlike Traditional IRAs, are tax-free growth and tax-free distributions when you start taking your money out. Also, you don’t have to start taking the money out at age 70 ½ like you would have to with an IRA. Though the amount that you convert over will be taxed, the special law for 2010 allows you to split the tax into the following years – half in 2011 and half in 2012. This allows you to pay the tax over time and also gives you the chance to avoid paying taxes in a higher tax bracket.
Please keep in mind that even though this is a wonderful opportunity for some, converting to a Roth IRA is not for everyone. Each and every individual has different circumstances. If you’re curious as to whether this strategy is best for you, feel free to contact us at (435)773-9444.