I have $300,000-plus in CDs in three different banks, all invested in regular IRA accounts. I am considering converting them to Roth IRA CDs and want to know if that is routine, or does it create some issues? I'm 67 but I do not have a need to draw on the IRA accounts at this time.
-- Bill Deposits
A: Dear Bill,
It's involved, but it's routine. Let's call it an involved routine. First of all, there are some income limitations on your ability to convert a traditional IRA to a Roth IRA in the 2009 tax year. Those income limitations are eliminated in the 2010 tax year, so if you don't qualify for IRA conversion in 2009, you will in 2010.
Here's the 2009 tax year language from the IRS Publication 590, Individual Retirement Accounts:
Converting From Any Traditional IRA Into a Roth IRA
You can convert amounts from a traditional IRA into a Roth IRA if, for the tax year you make the withdrawal from the traditional IRA, both of the following requirements are met.
- Your modified AGI for Roth IRA purposes (see Modified AGI in chapter 2) is not more than $100,000.
- You are not a married individual filing a separate return.
Note: If you did not live with your spouse at any time during the year and you file a separate return, your filing status, for this purpose, is single.
