Here are some tax strategies for high incomers to consider:
- You can set up a regular IRA and make nondeductible contributions and converting to a Roth in 2010. Tax is due on the earnings only.
- You have the option to report half the income in 2011 and the remaining half in 2012.
- If you convert to a Roth early in 2010, you start accumulating earnings tax-free sooner.
- Remember, distributions after attaining age 59 1/2 are tax and penalty free.
- Roth IRAs have no required minimum distributions for people age 70 1/2 and over.
Review these options with your tax professional before implementing a tax strategy. Additional advantages may be available to you.