Beginning January 1, 2010, the adjusted gross income limitation of $100,000 will be lifted and this will allow anyone regardless of income to convert their IRA to a Roth IRA. There is a provision, a default provision that will allow the taxes to be spread out over the years 2011 and 2012. Sounds good doesn't it? Well not so fast.
The tax rates are going up in 2011. You may end up paying more taxes by taking the default choice of spreading it out over those two years. Instead, you may want to go ahead and pay the taxes in 2010 when the rates are still low.
You will have to tell your advisor or custodian that you want to pay the taxes in 2010, because the default option is to spread it out over 2011 and 2012. If you do not request this from your advisor or custodian, then you will automatically get the default option and more than likely end up paying more in taxes.
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