High Yield Investments With Security - Notes - Options - Roth IRAs - 401ks

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2010 Roth IRA Income Limit and Rollover Loop Hole

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The Tax Loophole Everyone Will Miss

Even though Obama is in office we have Bush to thank for this 2010 tax loop hole.  I think most people will miss out on this one.

The Bush tax cuts, when he was in office, contain a unique clause regarding the Roth IRA in 2010. Specifically, it contains language that makes the Roth IRA available to anyone regardless of their income, but only for one year (2010).  This is a huge advantage for people who know what to do with a Self-Directed Roth IRA.

**In another article I will focus just on the Self-Directed Roth IRA and why I use it myself.

In an effort to extend his tax cuts, the last President agreed to a number of oddities in tax legislation effective this year. One of the strange clauses is a single year cap exemption. In 2010, the income cap of $100,000 will not apply to the Roth IRA. Put in simple terms, you can convert to a Roth in 2010 regardless of how much you make. You can only do it in 2010, not 2009 or 2011.

So what does this mean for you?

If you are making more than $100,000 a year, you now have the privilege to open a Roth IRA or even better the Self-Directed Roth IRA.  But the most important advantage is you can now roll your existing 401(k) or traditional IRA over into a Roth IRA or Self-Directed Roth IRA account.

FYI, if you convert a traditional IRA or 401(k) to a Roth IRA, you must pay taxes on the moved money. However there is another important part of this bill - you can defer half the taxes of that rollover to 2011 and another half to 2012.  So please consult your CPA or Tax Attorney.  Some say you can do part or some but I believe the more money you can cram into a Roth, the better off you will be in the end.  Pay the little tax now on a smaller amount or pay a ton of tax later on a lot of money.  I bet the government would want you to wait so do the opposite.

Roth IRAs

A Roth IRA is a retirement account that offers a lot of advantages. The primary advantage is found in the gains and distributions from the account. Simply put your account is TAX FREE (did I put enough emphasis on that?). So the money is yours Free of Taxes which includes all the GAINS you have made from your investments over the years. This coupled with Real Estate Notes and Real Estate Options in a Self-Directed IRA is an incredible tax advantage.  Just think if you didn’t have to contribute to your 401(k) or IRA anymore for the rest of your life and still make Millions.  With a Self-Directed Roth account that is easier than you may think.

The only criticism of Roth IRAs has to do with income caps. Simply put, a person with a modified gross adjusted income of $100,000 or more cannot convert an existing IRA to a Roth.

So Why Would They Do This?

Ask yourself, “Why would the government put a cap on income like this on a Roth IRA?”  Do they think that people will take advantage of this retirement account?  Do they not want a lot of people using this account as retirement?  My guess – Because they know what they are doing and they know how powerful a Roth is.  They pay top dollar for the smartest PhD’s to make sure the government gets paid.  They know that the Roth IRA is a powerful retirement plan for someone that knows how to use it.  They don’t want to give this power to smart people who already know how to make a lot of money.  The Roth IRA is your way to get out of the system and become wealthy in a short period of time. 

So now that this hurdle with the Roth IRA is gone lifted in 2010, what are you going to do about it?  Now is your chance to open one or roll your funds over.  Do it now, you will thank me later.

What if You Make Less?

You are not left out if you make less than $100,000 a year. You can still open a Self-Directed account or roll your existing accounts over into a Roth IRA and take advantage of deferring the taxes for 2 years.  They could start messing with the income limits at any time so I would rush and get one now in order to get grandfathered in.


Just think if you never had the problem of paying taxes on your retirement. If that was the case, then you really wouldn’t have to make as much money in that account. Which means - you can retire early.

Think about it: There appears to be no reason why the politicians would create a one year exemption to the Roth IRA income cap. It certainly seems a bit fishy, but you might as well take advantage of it, now is your chance.


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