Tax Highlights for 2010

• As of January 1, 2010, the $100.000 Modified Adjusted Gross Income (AGI) limit for converting traditional IRAs to Roth IRAs is eliminated – any individual with an IRA may now convert. Conversions may also be made from SEP IRAs and SIMPLE IRAs. However, non-spouse beneficiaries may only convert from employer qualified plans, not IRAs. The income from a 2010 Roth conversion can either be reported in two equal installments for 2011 and 2012, or all in 2010.
• Beginning on or after January 1, 2010, all employer-sponsored qualified retirement plans must offer direct rollovers to all non-spouse beneficiaries. Non-spouse beneficiaries are eligible to directly rollover inherited plan assets to an inherited Traditional IRA, or convert some or all to an inherited Roth IRA. Required Minimum Distributions (RMD) must be taken from these inherited accounts however, as Minimum Distributions from IRAs are required again in 2010.
• Qualified Charitable Distributions (QCDs) permit Required Minimum Distributions from IRAs to be sent directly to charities. Though not available currently in 2010, approval is pending in the Senate. The House has already extended this capability in their version. Keep your fingers crossed.

• Use and application require careful analysis.
  
• For our clients, we will be evaluating the appropriateness at your annual review.
  

• We now have the 2010 Health Care Act and its amendment by the 2010 Health Care Reconciliation Act. The acts will have a major impact on most Americans. Analysis and implications will be forthcoming.