Deferral and Spreading of Roth Conversion Income Not Always Best
Journal of Accountancy, Forthcoming
2 Pages Posted: 19 Dec 2013
Date Written: July 1, 2010
Advice abounds on when to carry out a Roth IRA conversion and how to pay for it. Often, a better planning strategy for some taxpayers may be to opt out of the two-year spread election for the tax liability from a Roth IRA conversion, incurring the entire resulting income tax in the conversion year. This may be the case for high-income taxpayers who (1) expect tax rates to increase significantly in the future, and/or (2) are in an AMT position, especially one caused primarily by permanent ("exclusion") adjustments and preferences.
Keywords: IRA, Roth, conversion, deferral, AMT, rate increases
JEL Classification: E62, H21, H22, H24, K34
Suggested Citation: Suggested Citation