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Financial Planning / Tax Strategies
|Subject: Re: Regular IRA xfer to Roth IRA||Date: 8/27/1997 10:08 AM|
|Author: TMFTaxes||Number: 282 of 124773|
<<If you do the latter, remember that the distribution from your IRA might bump you into a new tax bracket, since one-quarter of the amount will be included in your 1998 income.'>>
<<What do you make of that? Did Fortune make a slightly different interpretation of the rollover provision that they might need to retract in the next issue? Or are my concerns about rollovers and the AGI limitations less worrisome given this different math?>>
Nope. Not necessarily.
Remember that for rollovers that take place in 1998 ONLY, you'll get a break by being able to pay the tax over a four year period. The law is unclear if that means: compute the tax in TOTAL for 1998, and pay 1/4 in 1998 and the remaider over the next three years.
OR...report only 1/4 of the IRA to Roth rollover in 1998, and report the remainder over the next three years.
Most professionals now believe (and I am one of them) that you will only be required to report and pay tax on 1/4 or your IRA to Roth rollover in 1998. The remainder will be reported in the future.
But the real question that I have is, although you get this special break, will the TOTAL amount of the IRA to Roth rollover be included in the AGI limitation computations for 1988, even though the income will be spread out over a 4 year period.
Hopefully IRS regulations are on the way.
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