Roth Conversion Plan

You've probably heard talk in the news about the new IRA rule for 2010. In a nutshell, if you convert from a traditional IRA to a Roth before the end of the year, you can spread the taxation out over two years.

Our President, Eric Stratton, has gone a step further; he has created a unique strategy that makes the conversion even easier to stomach. Using this plan, retirees can convert a sizable portion of their IRA with no loss to their account value. A client who starts with a $300,000 traditional IRA can end up with $200,000 in the traditional, and $100,000 in the new tax-free Roth; the original $300,000 is intact, and 1/3 of that is now tax-free forever in the Roth.

To be clear- you are paying the applicable taxes on conversion. There's no getting around paying Uncle Sam! The strategy accomplishes three things:

1. Converts a large portion of your taxable traditional IRA to a tax-free Roth IRA.
2. Upon conversion, it utilizes the 2010 tax change, combined with the current low tax brackets, to pay as little taxes as possible. The conversion taxes are fully paid.
3. Using specific planning around specific financial vehicles, your ending account balance, after paying the conversion taxes from point #2, remains the same as the original value.

The new 2010 rules, combined with this strategy, make this year an opportune time to pull the trigger and convert. If you would like to meet to see if this may be a good option for you, please contact us to set up an appointment. There is no fee for this consultation. We look forward to meeting with you soon!