Have you heard about the "non-deductible" IRA? I am not referring to the ROTH IRA, but a standard IRA that many people are stuck with as their only option ( for a number of reasons which make making an investment in other kinds of IRAs not available ). In those cases, the IRS permits you to make a contribution to a normal IRA, but NOT take a tax reduction for it. You continue to get tax-deferred expansion, but during retirement your revenues ( interest and capital gains ) will be taxed, but not the contribution amounts. Do you know that Congress has passed a new law to help everybody to convert their conventional IRAs ( whether subtracted or not ) into ROTH IRAs in the year 2010. Those with Altered changed Incomes of more can't fund a ROTH at all.

You will remember that with ROTH IRAs, there's no tax reduction --- but the flip side is that when you take out the money correctly you do not pay earnings taxes. Also, employees who've got a retirement plan available at work like a 401 ( K ), might be excluded from making an investment in a deductible IRA as well relying on their earnings. For singles with salary of Changed changed salary of $52,000-$62,000 and joint filers with $83,000-$93,000 who have access to retirement plans at work face limitations on the deductiblity of IRA contributions.

So what are these folks intended to do to better get ready for retirement? They can ( commonly ) invest in a non-deductible IRA. And , Congress made the deal even sweeter for you. You do not have to pay any tax due on changing to a ROTH that year.

In reality, the IRS will permit you to pay the tax over 2 years ( 2011 and 2012 ). So you get a tax free "loan" in 2010 ( no additional tax due that year ) and then have 2 years to pay the tax due for changing to a ROTH. So if your revenue disqualifies you from funding ROTH IRAs now, simply fund a standard IRA ( take the reduction now ) or a fund a non-deductible one, relying on your individual circumstances. If you're under age fifty you can contribute up to $4,000 in 2007. Simply file the IRS Form 1040X to modify your return to incorporate the IRA reduction. That year will be here before you know it. In 2010, even cash in September IRAs and Easy IRAs can be converted to ROTH IRAs. This is going to be a bonanza for the taxpayer in that they're paying taxes on IRA balances then for NO taxes on these funds ( and their expansion ) during retirement.

For the general public, the sole cash for retirement will be money that you sent ahead ( and its expansion ). The more and earlier you send ahead ( save ), the better for YOU.