REMINDER! You May Want to Roll Into a Roth Account | USTaxAid

Diane Kennedy's Blog

REMINDER! You May Want to Roll Into a Roth Account

Written by Diane Kennedy, CPA on October 6, 2008

I posted this a few weeks ago, but it’s so important I want to sound the alarm one more time.

There is a HUGE silver lining right now if the value of your pension plan has declined. If it’s at the bottom, or near the bottom, roll the pension into a Roth account. You’ll pay income tax based on the current value of the conversion. Then the money is sitting in a Roth and can grow TAX FREE.

This is especially true for those of you who are planning to use a self-directed pension plan to invest in real estate, passive businesses or even the stock market. TAX FREE growth is a very nice strategy.

Remember, though, you must have a modified adjusted gross income of less than $100,000 to do a rollover into a Roth account. That income limit goes away in 2010.

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