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|Subject: Re: Company-funded profit sharing retirement acc||Date: 4/13/2010 7:07 PM|
|Author: aj485||Number: 66948 of 82747|
If you left this year you could roll it into what has been called a conduit IRA and leave it there without incurring any tax liability.
Only if the profit sharing plan is a "Qualified" plan. The OP did not indicate if it was a "Qualified" plan or not.
Under the 2010 rules you would then be able to move it into a Roth IRA.
Actually, you have been able to move directly into a Roth IRA from a Qualified plan since 2008. You don't have to use a conduit IRA.
You will have to pay taxes on the amount you roll over, but under a special provision for 2010 you could spread out the taxes over a two year period in 2011 and 2012.
Close, but not exactly.
For conversions made in 2010 only, you can choose to split the income generated by the conversion over 2 years - 2011 and 2012. You would then pay taxes on the additional income for 2011/2012 at the 2011/2012 income tax rates. Since the Bush tax rate cuts for the higher brackets are due to expire at the end of 2010, if there is a significant amount converted, this may not be a trivial difference.
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