<<I wrote>>If your son qualifies to deduct his contribution to a regular IRA he may be able to claim a $2,000 deduction in 1998, then take the rollover income over a period of four years. I'm not absolutely positive the IRS will permit this, but my discussions with people involved in developing the technical corrections act and guidance on the Roth IRA indicate that it may work this way.<<You wrote>>This is an outstanding stategy if it can work. Do you have any references to written authority on this.<<reply>>No, and based on my conversations with folks at the IRS, my guess is there won't be any written authority. There's some possibility that they will change the law to prevent this but it sounded to me like they would let it go. But I wouldn't expect them to point out this possibility in any guidance they provide.There's one little trick with this I should mention. The new law is likely to contain a provision that permits correction of erroneous contributions by making a direct trustee-to-trustee transfer from a Roth IRA to a regular IRA. When you do this by April 15 of the following year, your contribution is treated as if it originally went to the regular IRA. Possibly that provision will be broad enough to cover the reverse situation. If you want to do the best thing to assure this result, it's probably best to do a regular rollover (take the money out of the regular IRA and then contribute it to the Roth IRA) rather than merely telling the broker to convert to a Roth IRA. And I still can't promise that this will work when the dust settles, only that it works as the law is written right now.KAT in Chicagolandwww.fairmark.comTax Guide for InvestorsNow with expanded and revised Roth IRA information
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |
BATS data provided in real-time. NYSE, NASDAQ and NYSEMKT data delayed 15 minutes.
Real-Time prices provided by BATS. Market data provided by Interactive Data.
Company fundamental data provided by Morningstar. Earnings Estimates, Analyst Ra