1. The 2010 no income limitation in regard to a Roth IRA only applies to conversions. There are still income limitations to regular contributions.
2. The deadline for a 2010 Roth IRA conversion is 12/31/10 and you must elect to recognize the income in 2010 otherwise it will be split evenly & recognized in 2011 & 2012. Keep in mind that tax rates increase in 2011 so this might not be in your best interest.
3. The deadline to recharacterize a Roth IRA conversion done in 2010 is October 15, 2011. A nice feature in case the market tanks, you can recharacterize your conversion and not pay tax on money you no longer have.
4. If you convert a nondeductible IRA to a Roth IRA the only tax you will pay on the conversion is on the earnings.
5. Roth IRA contributions can be withdrawn at any time tax-free. The earnings may be subject to income tax and a 10% penalty. If the Roth IRA is from a conversion there is a 5-year holding period to avoid a penalty on withdrawals of contributions.
6. Distributions from a Roth IRA are not counted as income for the calculation of taxes on Social Security benefits.
7. An inherited IRA cannot be converted to a Roth IRA. However a surviving spouse can roll over to a spousal IRA, then convert to a Roth IRA.
8. The original owner of a Roth IRA is not required to take minimum distributions, but beneficiaries are required.
9. The rules for Roth IRA distributions are applied to the aggregate of all the Roth IRAs owned, not to each individual Roth IRA.
10. A planning strategy is to divide a regular IRA into various IRAs holding different investment classes, before converting them to Roth IRAs. The idea allows investors to take advantage of market volatility. If after conversion one loses money it can be recharacterized while the others can be kept as Roth IRAs.
