Deferral and Spreading of Roth Conversion Income Not Always Best

Journal of Accountancy, Forthcoming

2 Pages Posted: 19 Dec 2013

See all articles by William A. Raabe

William A. Raabe

University of Wisconsin - Whitewater - College of Business and Economics

John Everett

Virginia Commonwealth University (VCU) - Department of Accounting

Cherie Hennig

University of North Carolina (UNC) at Wilmington - Department of Accountancy and Business Law

Date Written: July 1, 2010

Abstract

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

Raabe, William A. and Everett, John and Hennig, Cherie, Deferral and Spreading of Roth Conversion Income Not Always Best (July 1, 2010). Journal of Accountancy, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2368885

William A. Raabe (Contact Author)

University of Wisconsin - Whitewater - College of Business and Economics ( email )

Whitewater, WI 53190
United States

HOME PAGE: http://billraabetax.com

John Everett

Virginia Commonwealth University (VCU) - Department of Accounting ( email )

Richmond, VA 23284
United States

Cherie Hennig

University of North Carolina (UNC) at Wilmington - Department of Accountancy and Business Law ( email )

601 S. College Road
Wilmington, NC 28403
United States

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