New 2011 Roth IRA Conversion RulesMarch 26, 2012 — 1,279 views
Keeping tax details straight year to year can become difficult for even the most experienced tax reporters – especially after the rules for a number of Roth IRA conversions expired last year and new ones were implemented.
As of 2011, the income limit for conversions has been permanently removed. This is both good news and bad news for the average consumer. Under the old rules, an individual could only perform a Roth IRA conversion if their adjusted gross income (AGI) was $100,000 or less. However, as of January that $100,000 cap is gone.
A person may now convert their Traditional IRA into a Roth IRA regardless of their annual income. However, those taxpayers that converted to Roth IRAs in 2011 no longer have the option of deferring conversion income into later years like in 2010, reports the Wall Street Journal.
There are still a number of Roth IRA income limits such as annual contributions in place. Check with your investment broker or personal finance advisor on the contribution caps set in place before making any lasting changes to your investments.