News & Events
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June 2010
The Conversion To Roth IRA
by Jack S. Johal
Income limitations on conversion of traditional IRAs to Roth IRA will be lifted in 2010 allowing millions of people with traditional IRAs to make the conversion if they choose to do so. Timing considerations are very important, and the following timeline may be helpful in making this decision:
Date and Event or Action to be Taken
January 1, 2010 - Income restrictions on conversions to a Roth IRA are lifted. Anyone converting to a Roth IRA in 2010 may elect to have the income taxed equally in 2011 and 2012 or they may report all of the income for the 2010 tax year.
December 31, 2010 - The last day to make a Roth conversion distribution for the 2010 tax year. Conversions after this date do not qualify to defer the income tax over later years. Taxes will be owed fully in the year of the conversion after 2010.
January 31, 2011 - Taxpayers must be sent IRS Form 1099-R by this date, which reports any distribution from an IRA, including conversion distributions.
April 15, 2011 - Taxpayers must file their income tax returns for the 2010 tax year or extension requests by this date.
May 31, 2011 - Taxpayers must receive IRS Form 5498, reporting any contributions to an IRA (including conversions into a Roth IRA) by this date.
April 16, 2012 - Income tax returns or extension requests must be filed for tax year 2011. If a taxpayer converted a traditional IRA to a Roth IRA in 2010, and did not report the income in 2010, then they must report 50% of the conversion income as part of their adjusted gross income.
April 15, 2013 - Income tax returns or extension requests must be filed for tax year 2012. If a taxpayer converted a traditional IRA to a Roth IRA in 2010, and did not report the income in 2010, then they must report the remaining 50% of the conversion income as part of their adjusted gross income.
Please if you have any additional questions.
