2010 Roth IRA Rules

This year marks a brighter future for Roth IRA account owners. Several basic regulations and contribution limits have remained, but the one creating the most of the hard sell today is the Roth IRA conversion event. An important feature that doesn’t change is the tax-free money saved in preparation for your retirement. Here are some of the 2010 Roth IRA rules to keep in mind.

Contribution Limits

For this year, the set contribution limits were sustained at 2009 levels. Thus, you can still make contributions up to $5,000, while the catch-up contribution also stays at $1,000 for fifty and older account holders.


If you are not very familiar with the Roth IRA conversion event, then you are certainly outdated. Though 2010 is actually the year that you will be authorized to carry out conversions, the profits to be claimed can be postponed until 2011 and 2012. Thus, it is anticipated that majority of the account owners will take advantage of this opportunity.

The Internal Revenue Service (IRS) has outlined special rule on how the tax must be compensated. They have awarded Roth IRA owners like you to have the option of claiming 50% of the conversion amount as gains in 2011 and the other 50% by 2012. Remember that this only applies in 2010, so after this year, taxes will all be fully remunerated the next year going forward.

If you are looking forward to converting your traditional IRA and 401(k) account into Roth account, it’s best that you do it sooner than later by complying with the 2010 Roth IRA rules. This is because of the following reasons:

The market is recovering so you can benefit from the conversion option while your account funds are lower and you pay lower income tax.

If this strategy doesn’t go your way, you can easily carry out a Roth IRA re-characterization, also known as the conversion ‘take back’. This permits you to complete repeal the conversion.

Phase-Out Limits

This feature of the Roth IRA doesn’t give much this year. Single filers did not get improvements, although joint filers receive a $1,000 increase to the bottom as well as the top ranges.

While many people desire to open a Roth IRA, unfortunately not all of them meet the Roth plan phase-out limits. Due to this, most people choose to go with the pretax substitute of the traditional IRA. The only setback with the traditional Individual Retirement Account, aside from paying the taxes on your retirement, is that after the definite income limits you will not be able to receive a tax deduction for contributing to one, though you will obtain a tax deferred growth on your account.


The good news is that the 2010 Roth IRA rules on rollovers from 401(k) account to Roth plans are now much easier. If before you need to:

  1. Establish a traditional IRA.
  2. Roll your employer-sponsored 401(k) to traditional IRA.
  3. Set up a Roth IRA and accomplish all of the necessary conversion paperwork.
  4. When the conversion is finish, you will have to close the traditional IRA.

Today, you can directly convert your account from a 401(k) plan into a Roth IRA, which surely makes you a happier customer.

Leave a Reply

Your email address will not be published. Required fields are marked *

Copyright © 2024 NewIRARules.com - All Rights Reserved.

The information provided on this website does not constitute professional financial advice. We do our best to maintain current & accurate information, but some information may have changed since it was published. Please consult your tax or legal advisor(s) for questions & advice concerning your personal financial situation.