Thanks to Mom on Dealz for sharing her new series, Ask an Accountant! Sharon is married to an experienced accountant, so if you’re looking for a professional to help out with taxes this year, give him a call.
How I want to handle my rollover..In 2010 I rolled over all the money from my IRA (which started out as a 401K )to a Roth IRA. Do I want to split the taxable amount between 2011 & 2012 or do I want put in the whole taxable amount this year & take the tax hit all this year?
If you think you will be in a higher tax bracket next year, then take it all now. If it will not make that much of a difference, split it to get refunds in both years. In the end you will most likely pay the same amount of tax on those dollars, you just have the option of paying the tax over 1 year or 2. Personally, I would opt for 2 years…(why pay the IRS now if they are allowing you to pay later with no penalty) You control the use of the money, not the IRS. This can be a gamble if tax rates increase, but I don’t think that wil happen for a few years.
*Please keep in mind this post is for informational purposes only and answers given are very general. Many things depend on individual circumstances. Please contact your personal accountant or financial advisor for your particular situation.