Given all the attention that Roth Conversions have garner this year, many people are surprised to learn that Roth Conversions have actually been allowed for quite some time now. However, the year 2010 provides the opportunity for individuals/couples with modified adjusted gross income over $100,000 (who were previously ‘disqualified’ from doing conversions) to join in the fun this year. There is a possibility that the opportunity may be extended for additional years, but since it is already 12/17/10 and the deadline for a conversion is 12/31/10, we’re not sure we’d want you to wait until Congress is done debating.
The one other special opportunity in 2010 is the ability to spread the tax liability over 2011 and 2012. This is unique and most likely will not be repeated.
If you are thinking about a Roth conversion for this year, please note that the deadline is only 14 days away. While you have the option to ‘change your mind’ by doing a re-characterization all the way until your tax return is filed (Oct 15th if you request an extension), the conversion must actually happen by 12/31/10.