IRA Conversion

[mirandalasha]

I know in 2010 you could convert regular IRA's to a Roth IRA...is this something you can still do in 2011? My investments are really down so it seems like now would be the time to do this. Thanks for your your help!

[clydewolf]

Mirandalasha,

Yes, you can convert your Traditional IRA, or part of it, to a ROTH IRA in 2011, and any year going forward.
Conversions to ROTH IRAs must be completed by December 31.
You will pay income tax on the tax deferred amount of your Conversion.

Be sure to complete and file with the IRS, Form 8606, Part II when you do the Conversion.
Keep a copy of this form with your IRA records for yourself. You may never need this in your records, but when you do years from now, you will be glad you have kept that record.

Conversions completed in 2010, the tax payer had the choice to pay the taxes on their 2010 tax return or spread the tax over 2 years, 2011 and 2012.

For Conversions in all other years, the tax is payed with that year's tax return.
If you do a Conversion in 2011, you will report the Conversion and pay the tax on your 2011 - 1040.

Be sure to name an individual as a Beneficiary to your new ROTH IRA.