Retirement Minute: Should You “Undo” Your Recent Roth IRA Conversion?

October 1, 2011

Retirement Minute – Should Your Re-convert Your Roth IRA?

by John Bearss

This is a reminder to all of you who converted a traditional IRA to a Roth IRA in 2010. If your Roth IRA has sustained losses as a result of the recent market downturn, you may want to consider whether it makes sense to undo your conversion. You have until October 17, 2011, to undo your 2010 conversion. If you've already filed your federal income tax return for 2010, you'll need to file an amended return if you reconvert your Roth IRA back to a Traditional IRA. A re-conversion can help you avoid paying income tax on the value of IRA assets that have been lost in the downturn. When you reconvert, your original conversion is treated for tax purposes as if it never happened.

On the other hand, the current market downturn also presents an opportunity to convert additional traditional IRA assets to a Roth IRA at a potentially lower tax cost than just a few months ago.

Knowing whether it makes sense to reconvert your Roth conversion depends on several factors, including the extent of the losses in your Roth IRA, the potential value of the special 2010 tax deferral rule to you, and your expectations of where the markets may be headed.

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Your Host: Jerry Robinson (Economist, Best-Selling Author) Jerry Robinson is an economist, published author, columnist, radio talk show host, and international conference speaker. Robinson has been quoted as an economic authority by USA Today, FoxNews and many other news agencies. His columns have appeared regularly in numerous print and web publications, including WorldNetDaily, Townhall, and FinancialSense. In addition, Robinson is also the Editor-in-Chief of the popular economic newsletter, Follow the Money Quarterly. He resides in Texas with his beautiful wife.

 

The Retirement Minute with John Bearss

John Bearss, Retirement Specialist (Christian Financial Advisor Network) 

John R. Bearss is a Retirement Specialist with the Christian Financial Advisor Network. He has been successfully helping clients nearing retirement generate lifetime income streams for 25 years.

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