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Important Tax Date For KFG Clients

This is a reminder to all our clients who have traditional IRA’s.  Be sure to call your accountant and find out if you should convert a portion of your IRA to a Roth IRA by November 15th.

The person who can benefit most from this is someone in a low tax bracket, 15% or under.  If your taxable income is under $68,000, you are in the 15% tax bracket.  The idea is to “fill up” your tax bracket with additional income from doing  an IRA conversion, so none of the 15% bracket goes to waste. 

For example, if your taxable income is estimated to be $48,000 this year, you can take $20,000 more in income and only pay the 15% tax.  This is a perfect opportunity to convert $20,000 of your traditional IRA to a Roth IRA.

The benefit of a Roth IRA is that all future earnings and accumulations are tax free and are also tax free to your heirs when they withdraw the money.  Also, Roths don’t require a minimum required distribution at age 70.5.

Be sure to have your accountant give you an estimate of your taxable income and how much of your traditional IRA you can convert to a Roth IRA to stay in the 15% bracket.  We will need to know the amount you want to convert by November 15th, 2010.

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