72t and conversion to Roth IRA

You are here:
< Back

L1: 72t and conversion to Roth IRA The end of year 2007 I will mark the end of the 5 year period of taking 72t payments. Are there any ramifications, except for a large tax bill, If I chose to convert in 2008 my current IRA (currently worth about $1,200,000.) into a Roth IRA? I understand If I wait until 2010 to do the conversion, I can spread the taxes due over a period of two years. 2006-12-05 01:52, By: Sartre, IP: [200.126.213.100]
L2: 72t and conversion to Roth IRABe careful. You might run afoul of the dreaded AMT (ALTERNATIVE MINIMUM TAX) because you will get -0- deductions for any taxes paid in that year (2008), no personal exemptions, and probably no itemized deductions (these latter 2 because they are “phased out” based upon the income level). Also, unless you are in PA (which doesn”t tax retirement plan distributions after 59 1/2), the conversion will probably be subject to state income tax, which you won”t get a deduction for under AMT in 2008, even if you prepay it, nor in 2009 because you would probably become subject to AMT again because of the size of the state income taxes paid in 2009 for 2008.2006-12-05 19:29, By: dlzallestaxes, IP: [4.175.9.229]