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Roth conversions: a partial maneuver

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in Leaders & Managers,Management Training

Q. I was interested in your article on Roth IRA conversions. Do I have to convert all the funds in my IRA? B.R., Baldwin, N.Y.

No. If you choose, you can convert part of a single IRA or multiple IRAs. However, you can’t treat the converted portion as coming only from nondeductible contributions. For example, say your sole IRA is valued at $100,000 with only $10,000 (10%) representing nondeductible contributions. If you convert $10,000 to a Roth IRA, $9,000 (90%) is taxable and the remaining $1,000 (10%) is nontaxable.

Tip: Remember that you can convert to a Roth in 2009 only if your AGI is $100,000 or less. This dollar cap is removed next year.

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