Lock in Current Tax Rates: Roth Conversion Opportunity for Qualified Plans Like Your 401k

Looking to lock in the current income tax rates and start generating tax-free income for your retirement income via a 2010 Roth conversion but discover you have assets that most IRAs won’t accept? We can help!

We are hearing from numerous retirement investors who directed their Qualified Plans to purchase a wide variety of non-traditional investments, but are meeting resistance in converting those assets to a Roth IRA. These qualified plans run the gamut of available types, from defined contribution plans such as 401k plans, to profit-sharing plans, to money purchase plans, to defined benefit plans. Many of these plans have accumulated significant assets, including real estate. In order to take advantage of the 2010 Roth conversion opportunity,  these assets must be distributed from the plan to a Roth.

New Direction IRA focuses on this particular process. Recently, many individuals have come to us because they want to move assets out of company plans and into IRAs as they reach retirement age. Unlike most IRA providers, we are happy to help get those assets moved.

With the 2010 changes, more individuals are looking to move their assets to a Roth IRA, thus locking in the tax rates at the current (some say low) tax rates, while at the same time getting tax-free income for the future. If you find yourself wanting to convert non-traditional plan assets to a Roth in 2010 and lock in the current tax rates, we can help!

The conversion process:

•  Open a new Self Directed Roth IRA with New Direction IRA
•  Determine the value of the asset(s) and initiate a direct rollover from the old plan to the new Roth
•  Include the value of the asset(s) rolled on their individual tax return either in 2010 OR ½ in 2011 and ½ in 2012. (You will receive a 1099R with the value listed)
•  The asset(s) would then be owned by the Roth IRA and would be tax-free from that point forward.

A Self-Directed Roth IRA is only different from any other Roth in that it can hold a much wider variety of assets.

Consult with your tax advisor for what the tax implications are and ask your plan administrator what your options are for moving assets out. If either of your experts or you have any questions, we would be happy to share the rules and details. Call us today to get the process started.