2010 marks the elimination of income limits to clients wishing to convert to a Roth IRA. For those choosing to convert in 2010, the income taxes are able to be split over 2011 & 2012 tax returns. There are many reasons you should consider this opportunity.
Roth and John Hancock
John Hancock is an industry leader in Roth conversion education. Partner with a company that helps educate the financial professionals you work with in planning for your retirement.
Take a side by side look at the differences between a Traditional and a Roth IRA:
| |
Traditional IRA |
Roth IRA |
| Tax treatment of contributions |
Tax-deductible (Subject to limitations*) |
After tax |
| Tax treatment of withdrawals |
Income Tax |
Contributions: Tax exempt
Converted Amounts: Tax exempt
Earnings: Tax exempt provided you have had the Roth IRA for at least 5 years, and are at least 59½ years old.
|
| Penalties assessed on withdrawals |
10% federal penalty on withdrawals if under 59½ (unless exception applied) |
Contributions: Penalty Free
Converted Amounts: 10% federal penalty unless you have had the Roth IRA for at least 5 years, are at least 59½ years old, or meet recognized exception guidelines**
Earnings: Penalty free, provided you have had the Roth IRA for at least 5 years, are at least 59½ years old, or meet recognized exception guidelines** |
| Required Minimum Distributions (RMDs) |
After age 70½ |
None |
| Maximum contributions |
100% of earned income up to $5,000 ($6,000 if age 50 or older) |
100% of earned income up to $5,000 ($6,000 if age 50 or older) |
| Contribution Deadline |
April 15th of following year |
April 15th of following year |
*$56k - $66k AGI Filing Single or $89k - $109k AGI Married, Filing Jointly
**Commonly recognized exceptions:
- Death or disability of owner
- Qualified first home purchase
- Qualified medical expenses
- Health insurance premiums while unemployed
- As part of a series of substantially equal periodic payments
- Qualified higher education expenses
Nine Potential Reasons You May Want To Convert To A Roth IRA:
1) The current market provides a low cost conversion opportunity
2) To hedge against increasing income tax rates
3) To gross up the value of retirement accounts
4) Tax diversification
5) Social Security planning
6) Tax loss harvesting
7) Reduce your taxable estate
8) Trust planning purposes
9) Tax-exempt stretch
| When considering an annuity for use in an IRA or other tax-qualified retirement plan (i.e., 401(k), 403(b), 457), it is important to note that there is no additional tax deferral benefit, since these plans are already afforded tax-deferred status. Thus, an annuity should only be purchased in an IRA or qualified plan if some of the other features of the annuity are of value, such as access to specific portfolio choices, the ability to have guaranteed payments for life and other guaranteed benefits, and you are willing to incur any additional costs associated with the annuity to receive such benefits. See the prospectus for details.
This material was prepared to support the promotion and marketing of Venture Annuities. Neither John Hancock Life Insurance Company (U.S.A.), John Hancock Life Insurance Company of New York, John Hancock Distributors LLC, nor any of their representatives provide tax, accounting, investment, or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used, for the purpose of avoiding U.S. federal, state, or local tax penalties. Please consult your own independent advisor as to any tax, accounting, investment, or legal statements made herein.
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