Ask an Accountant: IRA Rollovers

April 1, 2011

As we all know, it’s that dreaded time of the year-Tax time! In honor of tax season, I have a new series called “Ask An Accountant”. Send in your tax questions each week to momondeals@yahoo.com and I will post the question and give an answer from an experienced accountant.
Question:
How I want to handle my rollover..In 2010 I rolled over all the money from my IRA (which started out as a 401K )to a Roth IRA. Do I want to split the taxable amount between 2011 & 2012 or do I want put in the whole taxable amount this year & take the tax hit all this year?
Answer:
If you think you will be in a higher tax bracket next year, then take it all now. If it will not make that much of a difference, split it to get refunds in both years. In the end you will most likely pay the same amount of tax on those dollars, you just have the option of paying the tax over 1 year or 2. Personally, I would opt for 2 years…(why pay the IRS now if they are allowing you to pay later with no penalty) You control the use of the money, not the IRS. This can be a gamble if tax rates increase, but I don’t think that wil happen for a few years.
*Please keep in mind this post is for informational purposes only and answers given are very general. Many things depend on individual circumstances. Please contact your personal accountant or financial advisor for your particular situation.

photo credit: austinpost.org

{ 1 comment… read it below or add one }

Daniel Gall January 7, 2013 at 12:49 am

Hello

I am 72 years old and retired. I have some of my money in a traditional IRA account in one institution and I would like to transfer part of the funds to another institution and get an IRA CD. I have been taking the minimum distributions as required from this account, I need to know if this opening of an IRA CD is a do able. I am not clear on the regulations at my age and also how future minimum distributions are handled.

Thanks

DJG

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