Go to Jeff Salisbury LWGate Home Page.From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: Roth conversion taxes
Date: Tue, 20 Oct 1998 08:20:45 -0400
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>As I understand it, upon conversion, my $20K IRA would count as an additional >$20K of income for me this year, which I could then divide over 4 years. Net >result is an additional $5K of income each year. True? True. For conversions done in calendar year 1998, you can take the $20K of conversion income all this year or split the income over 4 years. For conversions done after 1998 you have to take all the conversion income in the year you do the conversion. >But, If I go to grad school in 1999, I will have very low income (probably >$15K salary). Would it then make sense to convert in 99, assuming I wouldn't >be paying much in taxes on my low salary? Absolutely! Converting to a Roth essentially locks in your tax bracket at the time of conversion. If you can lock in a lower bracket, go for it. But you should run the numbers and see exactly what bracket you're in. If you're in the 15% bracket now, it might not hurt you to convert this year, especially if you elect to split the income over 4 years. Rich Carreiro rlcarr@animato.pn.com P5-100/RedHat Linux 4.1 - -
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