Nov. 7 – Bureau of National Affairs
Professor Kathryn Kennedy authored article:
A new set of IRA rules is causing a stir among the benefits and financial communities. Beginning in 2011, there are no longer any income restrictions for taxpayers wishing to do a Roth IRA conversion from a traditional IRA; thus, the wealthy can now pursue a Roth IRA conversion. While the conversion to a Roth IRA from a traditional IRA causes immediate taxation of the IRA, all subsequent distributions from the Roth IRA are currently exempt from federal taxation. Many wealthy taxpayers understand the tax advantages of doing the conversion (as the income growth under the Roth IRA will be exempt from taxation), but balk at the payment of the upfront taxes due upon the Roth conversion, especially if the IRA account is sizable.