Some IRA terms you should know

Some IRA Terms You Should K now The changes to laws governing Roth conversions that took effect in 2010 brought IRAs to the forefront of tax planning conversations. Those conversations will likely continue this year, as some changes to your new Roth can be... More

Some IRA Terms You Should K now The changes to laws governing Roth conversions that took effect in 2010 brought IRAs to the forefront of tax planning conversations. Those conversations will likely continue this year, as some changes to your new Roth can be made through October 2011. Here are three terms you may hear, along with brief explanations. • Conversion: A conversion is the act of moving your retirement account assets from one type of IRA to another. You can convert all or part of a traditional IRA to a Roth IRA. Just remember the amount you convert is taxable, assuming you have no basis in your traditional IRA. • Recharacterization: After making a Roth conversion, you can choose to transfer the assets back to your traditional IRA. Recharacterizing cancels the initial conversion as if it never happened, which can be useful when the value of the assets decline after you first convert. While the loss itself is not deductible, you ll avoid paying tax on the full amount of th Less