Retirement Planning Guide

When people retires the key is to have money that each person has the option on. What they can do later is that they can buy. Are eleven categories of an existing IRA. One of them is a Roth IRA. At some point may decide to convert to Roth IRA for one reason or another.

Essentially an IRA is an Individual Retirement Arrangement, which most refer to as an Individual Retirement Account. Any person with taxable income may have an IRA, unless married and unemployed with a spouse that works. There is no minimum or requirement as to the amount that a person can contribute to their IRA, but their is a maximum, which goes according to their annual contribution and increases yearly.


In addition, a person is not taxed on the money accrued on their investment until they withdraw funds. This however may not apply in some cases with a Roth IRA. Although a person never has tax deductible contribution option, people tend to like IRA accounts, since they are not taxed on the money gained, as they are with a traditional IRA.

Additionally, Traditional IRA's have mandatory distributions, while Roth IRA's do not. This is the reason why some choose to have an Roth IRA conversion. In respect to this, there are some requirements; however some of these requirements are set to change in 2010.

Presently, one of the mandatory requirements is that a single individual or married couple living within the same home, make less than 100,000, however this limitation will no longer exist as of next year. Anyone who makes less than $100,000 now has the option for a Roth IRA conversion at this present time.

Anyone who decides to wait to 2010 has the option to defer claiming the conversion towards their income to the next two years. One half of the conversion amount is claimed in 2011 and the other half in 2012. With this option, the tax rate goes according to the rate for that year. In 2010, there is also to convert 401k plans, as well as other retirement plans into an IRA, in addition to the traditional IRA's. Basically, there is a bit of math involved in the determination of what will result in your taxable income within that year or two years if that is the option you go with.