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I think its too late, or maybe wasn't even possible,
to reduce our income to meet the $100,000 cap so that
we can "rollover" our regular IRAs to ROTH IRAs.
My wife and I earned about $135,000 this year. But is
there a way to defer the income or reduce it via contributions to other retirement funds, so that we
can reduce the reported income legally to under
$100,000? We file joint. I have about $35,000 in an
IRA, my wife has about $75,000. I thought I could
finance paying the taxes by refinancing the house.
My personal believe is that I can grow the money
in the Roth IRAs significantly, so that the tax-free
withdrawal could be a major benefit. I realize that
this would be a major movement of assets, but I think
it could be worth it.

...or just say, oh well, screwed again... and just
start contributing $4000/joint to a startup Roth?

Is there someone in the Detroit area I could talk
to about tax/retirement planning and Roth IRAs?
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Most probably it is too late. Without knowing the details if your income it is impossible to say for sure, but if your income is W-2 income, you will not be able to reduce your AGI below 100K anyway. And I am not sure it is right for you either, because of the 31% tax bracket you are in. Just take it 4K/year at a time. If all the money in your IRAs are pre-tax, and you are so confident in your investment abilities, the conversion may not be the best thing for you anyway.
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pynnen,

It is definitely crunch time to try to get your Roth converted before the end of the year. But, you can still convert your old IRA next year. You just won't benefit from the 4 year schedule to pay the taxes on the IRA money (this goes away in 1999). So, don't get overly anxious about this.

I can't give the answer you need, but I can offer you some advice and some tools to help you out:

It's not a "given" that a Roth is better for you. Things to consider:

- Current tax rate and retirement tax rate. Since your current tax rate is high, the deductible IRA would probably get the nod.
- Years to retirement. If you hold your investment long enough (30+ years, e.g.), the compounding in the Roth will blow away the deductible IRA, even for high tax bracket earners.
- Earnings on taxable accounts. Consider investing the money saved in the deductible IRA (which would have gone to pay taxes for a Roth) into a long term equity investment.

Fortunately, calculators are available to quickly determine the benefits of each situation based upon your circumstances.

There is a calculator available which can help you determine what IRA is best for you: http://www.smartcalc.com/cgi-bin/smartcalc/ira1.cgi/FinanCenter

A more complicated calculator is available which will also help you determine if converting is good for you:

http://personal411.fidelity.com:80/retirement/buildassets/content/iraevaluator.html.tvsr

rustedSoul

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[[I think its too late, or maybe wasn't even possible,
to reduce our income to meet the $100,000 cap so that
we can "rollover" our regular IRAs to ROTH IRAs.
My wife and I earned about $135,000 this year. But is
there a way to defer the income or reduce it via contributions to other retirement funds, so that we
can reduce the reported income legally to under
$100,000? ]]

You may be too late this year, but there may always be next year. Some things to consider...

1. Defer salary and bonuses if at all possible
2. Convert taxabie interest to tax exempt interest if you have a large portfolio of mutual funds that annually "throw off" income. But be careful of the gains that you might incurr if you sell the funds.
3. Pay off debts to reduce your taxable income from your investments
4. Increase contributions to your employer 401k, SIMPLE, SEP plans
5. Increase contributions to your employer flexible spending plans

These are just a few suggestions...and while they may reduce your AGI, there may be other pitfalls. So don't just jump in willy nilly.

You can also get some additional suggestions at the Fairmark tax site (http://www.fairmark.com)

TMF Taxes
Roy

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