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I'm thinking about 2010 Taxes

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  • #16
    Originally posted by Alex_Adviser View Post
    Because the Roth is potentially better than the traditional IRA, it may make sense for you to convert a current traditional IRA into a Roth. To do so, you will have to pay taxes on your old IRA, but there will be no penalty for early withdrawal. Whether its a smart move will depend on your income tax rate today versus that in retirement; how you will pay the income tax bill due on the conversion; how long the Roth IRA will remain untouched; and the size of the IRA coupled with your desires for your estate.
    Right, all things to take into account for anyone converting a tradtional to a roth ira. In our case, because virtually all our income will be non taxable in the year 2010, converting $29K to a roth, after deductions, exemptions, child tax credit, retirement savers credit (which we will qualify for because of low income) we will pay a couple hundred dollars or maybe even zero dollars. This low tax will be equal to or less than the tax rate we will pay in retirement.

    We don't plan to touch any of our retirement, until retirement in 25+ years.

    Amazingly, we might even qualify for the earned income tax credit! If we do, I'll take it, but I'm not sure that is good use of government dollars. We will gross the most we ever have during 2010 and it is definitely not low income.
    My other blog is Your Organized Friend.

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