With the overwhelming advertising buzz we are hearing about, the Roth IRA Conversion rules changing in 2010, it’s difficult to separate fact from fiction. Beginning in 2010, the $100,000 income limit will be lifted, making the Roth IRA Conversion available to everyone.
This means that high net worth/high income IRA owners will be encouraged to convert their traditional IRA to a Roth IRA and eliminate the income tax on the growth and qualified distributions. Some of these high income individuals have plans to leave some or all of their IRAs to a qualified charity.
Any part of an IRA that is headed to a charity SHOULD NOT be converted to a Roth IRA. It’s simple. The charity will not need to pay taxes when they receive the IRA at the IRA owner’s death, so why should the owner pay conversion taxes now. In this case, not converting will save the IRA owner conversion taxes now and the receiving charity will have more money to continue their good work.
With the Roth IRA conversion frenzy just a few weeks away from the launching pad, it’s more important now than ever to seek out all of the IRA distribution training courses available.