Change needed in IRA laws to secure revenues
By By Ben Turpin | Jan. 20, 2010Wisconsin may end up being the only state in the union that fails to adopt the changes in IRA conversion law made by the federal Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA). The law removes the adjusted gross income limitation on people who want to convert their traditional IRAs to Roth IRAs (it was previously $100,000). Traditional IRAs allow contributions of untaxed income but disbursements on them are taxed and are required starting at age seventy and a half. Roth IRA contributions have already been taxed but do not tax disbursements and do not ever mandate them (this is significant in terms of estate planning because the money could continue to grow tax free over the lifetime of a beneficiary, unlike with traditional IRAs). It gets much more complicated than this for individual situations but in general, a person would want to convert to a Roth IRA if he or she anticipated being at a higher tax rate in the future than today.
