Fiction: I should take advantage of the ability to spread the tax on my Roth conversion over 2011 and 2012.

Fact: While spreading the conversion tax over a two-year period may be advantageous for many individuals, you should also consider the potential drawbacks of choosing to pay the taxes on the conversion in 2011 and 2012. An increase in tax rates after 2010 could mean a higher tax payment in 2011 and/or 2012. In addition, the taxable portion of the amount being converted may push you into a higher tax bracket in 2011 and/or 2012. These options should be discussed with a qualified tax professional.


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