Roth IRA's 2010 Tax Laws & How it Will Help Investors

Thanks to Paul DaCosta, tonight I listened in on a conference call with Dave Owens, CEO of Entrust Freedom, one of the industry leaders in Self Directed IRA and 1031 Exchange accounts. If you aren't familiar with these and you invest in Real Estate, you better start getting your feet wet, especially if you plan to retire.

I found this starter's guide on their website: www.entrustfreedom.com/free-reports/thanks/

Dave highlighted two important changes to 2010 tax laws governing Roth IRAs

1) Starting in 2010, taxpayers with modified adjusted gross income of more than $100,000 will be allowed to convert a traditional IRA to a Roth IRA.

2) Income taxes due on the 2010 conversion can be spread over two years. So the 2010 conversion amount may be included as taxable income in 2011 and 2012 - helping to spread out the tax bite.

Taking Advantage of the 2010 Rule

Fortunately there is a way for all taxpayers - regardless of income - to take advantage of this change in the tax code:

Start Funding a Traditional IRA Right Now!

Even if you don't qualify to make Roth IRA contributions or traditional IRA contributions on a before-tax basis, you can still make after-tax contributions to a traditional IRA. If you invest in a non-deductible IRA in the tax years 2006 through 2010, then you can convert those IRAs to Roth IRAs in 2010.

Most investors shy away from making non-deductible contributions to an IRA because they are not tax deductible, the investment growth is fully taxable, and because they are subject to minimum distribution rules they offer only a minimal tax shelter. But by converting these non-deductible IRAs to Roth IRAs in 2010 many of those disadvantages disappear.

The bottom line is... and this has been on my mind a lot lately. If we are working so hard to live, what are we making all this money for? I think it's so we don't have to work so hard later when we aren't physically able. If you aren't thinking about how Real Estate can play into your retirement portfolio you should be!

Call me! I'll get you pumped up.

Dill