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Move to Tax-Free Investing

Starting January 1, 2010, the income limits required to convert an existing retirement account to a Roth IRA will be lifted.

 

The Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) eliminates the $100,000 Modified Adjusted Gross Income (MAGI) limit and allows all taxpayers to convert their traditional IRA and retirement plan assets into a Roth IRA. This is exciting news to investors who have wanted a Roth IRA, but were never eligible. Depending on your situation, a Roth IRA can offer benefits not found in other types of retirement accounts.

  • Qualified withdrawals are tax-free
  • Investment earnings compound tax-free
  • No required distributions

Important Tax Considerations

If you do decide to take advantage of 2010 Roth IRA changes, keep in mind that conversions from non-Roth accounts to Roth IRAs generally are taxable for the year in which the conversions are made. However, under the new 2010 IRS rule (for the year 2010 only) you can split the converted income amount between 2011 and 2012, which means that you would not pay any taxes in 2010 on the amount converted. Be sure to talk with your tax professional to ensure you have a clear understanding of how the tax rules would affect you.

 

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Securities, investments, advisory services, and select Insurance products offered through LPL Financial and its affiliates, Member FINRA/SIPC and a SEC Registered Investment Advisor. North Island Credit Union and the Investment Department at North Island Credit Union are not registered broker dealers, nor are they affiliated with LPL Financial. Representatives are employees of North Island Credit Union and registered through LPL Financial. North Island Credit Union CA Insurance license #0719223.

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