As just about any financial planner will tell you, it is smart that you don't delay when it comes to the 2010 Roth conversion, which is actually right around the corner. People should be prepared, and they should also know that they do not have to wait until 2010 itself to actually go ahead and convert a Roth over if they have an AGI of less than $100, 000.When it comes to the 2010 Roth IRA conversion, the first thing people should understand is that it is normally for those who have an adjusted gross income exceeding $100, 000. This is no matter whether filing singly or jointly, as a married couple. For those with high incomes, this is probably a great time to convert any monies into a Roth. The 2010 one-time for AGIs less than 100, 000 will soon go away.

Right now, most market experts consider that the markets are and what would be best characterized as a down phase. This is to the benefit of people who are looking to convert to a Roth IRA because the income tax is to be paid on that IRA will probably be lower in value. However, waiting until 2010 itself could mean that the markets will rebound, which also means more tax will be owed.

For 2010, people should also know that while the conversion will occur in 2010, taxes due won't be due in 2010 according to Roth rules. Rather, any income that the Roth IRA has generated can be deferred until 2011 and 2012. The IRS, understanding this, has made a special provision for claiming of the tax at 50% in 2011 and another 50% come 2012.

This provision will only be in effect for 2010. After that, all taxes due will need to be paid in full in the following year after the year in which they are claimed. For this provision, if you spread the tax to be paid over two years, you will be basing your rate of tax on 2011. If you improve your income in 2012, you will probably end up paying much more in taxes for the conversion.

Even though, in 2010, the $100, 000 conversion limit has been eliminated, it isn't the case that any income restrictions will also be lifted for new contributions into a Roth. This is especially so if you exceed the phaseout limits when it comes to Roth contributions. In other words, you won't be able to deposit any new money. There's a loophole that has to do with contributing to a non-deductible IRA, though.

These 2010 IRA Roth conversions aren't just for a conversion from a traditional IRA, either. If there are any old 401(k) or other retirement programs that have been sponsored by former employers that exist, they can also be converted over as well. It might be a good idea to do all of them at one time rather than chopping up tax bills on each of them separately.

The last thing to realize when it comes to any 401(k)s that have been converted over into an IRA is that they will be taxed on the amount that exist in the account when it is converted. For example, if your 401(k) was worth $45, 000, and the new IRA is worth only $25, 000, you will be taxed at the $25, 000 figure. This means that the 2010 Roth conversion environment is favorable to those converting this year.