Will you be able to tranfer a traditional IRA balance into a Roth IRA for no cost in 2010?

Question

I read an article that stated, you will be able to transfer any traditional IRA into a Roth IRA with no cost or tax consequences, in 2010. This is if you have owned the Traditional IRA for atleast 5 years and the transfer balance is less than $10,000. IS THIS TRUE!!!!!!!!!!!!!!!!!

Answer 1

Well that article is wrong. When you rollover your Traditional IRA into a Roth IRA, you will owe income taxes on the gains and your deductible contributions. You will not owe taxes on your non-deductible contributions. Unless Congress added an amendment to the Pension Relief Act, which allows anyone owning a Traditional IRA right now can roll it over into a Roth IRA tax-free (which doesn't exist), you will owe income tax on the gains.

No matter how much you have in the Traditional IRA, I think it is trade-off when you roll it over into a Roth IRA. You pay income taxes now so that you don't have to in the future. And all future gains and dividends will not be taxable in the Roth IRA. Either way, if you hold a Traditional IRA and you don't want to roll it over, you will pay income taxes in the future when you begin withdrawing.

The age 59 1/2 rule will still apply, so people should be careful when they withdraw money before that age.

Answer 2

Not sure what you read but if transfer the balance of a trad IRA to the Roth, you'll pay taxes for early withdrawal! But you may be able to claim the atx on your tax return!!

Answer 3

No.

You still have to pay tax on it.