2009 Married Filing Jointly Tax Brackets
Question: 401K to Roth IRA conversion – Penalty and tax implications?
I am 39 years old and Filing Taxes As Married jointly. My wages were 60K in 2009 due to unemployment. My AGI will be about 100K from now onwards. Is this a good opportunity to convert my 401K from previous employer into Roth IRA as I will be in lower tax bracket? Will there be any penalties as the conversion is from before-tax to after-tax contribution?
Answer: If it is done correctly, then there will be no “penalty”. There will be ordinary income tax on the amount converted. In your case, the federal tax rate will be 25%; the state tax rate varies from state to state.
Taxpayers Will See Relief By Way of Inflation-Adjusted Indexing, But Total Tax Impact Remains Unclear, CCH Says
Taxpayers stuck in the current economic downturn will get at least some relief in 2011 thanks to the mandatory upward inflation-adjustments called for under the tax code, according to CCH, which today released estimated income ranges for each 2011 tax bracket.