New York Estate Planning Lawyer Blog
by Michael Ettinger, Esq.
There have been numerous articles written on the wisdom of converting your IRA, or a portion of it, to a Roth IRA. In 2010, the income limit on converting, previously $100,000 per year, has been eliminated allowing many more taxpayers this option.
Traditional IRA’s offer a tax deduction on the contribution but tax the distribution, required to start after age 70 1/2. Roths offer no deduction on contributions but the distributions are tax-free (after a five year holding period). Unlike a traditional IRA, with a Roth there is no mandatory age to take required minimum distributions.
The political struggle between the two major parties over the Federal estate tax, or “death tax” as its opponents prefer to call it, continued with the expiration of the estate tax on January 1, 2010 for one year. On January 1, 2011, the estate tax is scheduled to reappear but not for estates over 3.5 million at a tax rate of 45%, as in 2009 when the tax expired. Under the Bush era tax cuts, enacted in 2001, the estate tax in 2011 and beyond will be imposed on estates over one million, at a tax rate of 55%. Where do these latter figures come from? Those were the exemptions and tax rates in 2001 when the new law took effect. It was assumed that Congress would pass amending legislation some time over the intervening nine years to correct the problem.