Monthly Archives: November 2012

To Roth or not to Roth that is the question?

With the possible ending to the Bush era tax cuts coming on January 1, 2013, careful consideration must be given to whether it is now time to convert that traditional IRA account into a Roth IRA. The answer to this depends on your conception of what the future holds. If you believe the tax rates will be higher for all taxpayers and/or that you will retire in a higher tax bracket then you’re in today, now may be the time to take action.

If you’re a high income taxpayer and expect the re-election of Pres. Obama to mean an increase in the tax rate that you pay whether or not the Bush tax cuts remain for the rest of America, you should give careful consideration to a Roth conversion.

There are many factors to be considered when making a decision on converting your regular IRA sap or simple IRA to a Roth IRA. These factors include; how future tax legislation will affect your taxes and income tax bracket, your expected rate of return on your Roth or regular IRA investment, how long it will be before you begin drawing money from your Roth or regular IRA account, and what this will do to your current tax bill. These are just a few of the many things that must be considered before converting to a Roth IRA.

On the plus side a Roth IRA grows tax-free and allows tax-free withdrawals as long as basic rules are met. This tax-free growth along with the ability to make tax-free withdrawals could shelter you from future higher tax rates on your IRA account distributions. Roth IRA distributions are not counted when calculating taxable Social Security. In addition an inherited Roth IRA account does not create taxable income for your heirs when the account is distributed after death.

There are three ways to convert amounts from traditional IRA accounts to Roth IRAs:

  1. You can roll over your traditional IRA sap or simple IRA into a Roth IRA account. Simply close out your existing IRA, simple IRA or SEP account and deposit the funds into a Roth IRA within 60 days of receiving the distribution.
  2. You can also convert from your regular IRA to a Roth IRA by making a trustee to trustee transfer. You do this by directing the trustee of your traditional IRA account to the trustee of your Roth account. Don’t have a Roth account? Open one and then initiate the transfer.
  3. You can have the trustee of your current regular IRA account converted to a Roth account.

The important thing to remember when converting your traditional IRA to a Roth IRA is that income taxes will be due on the amount converted. If part of your regular IRA was funded through non-deductible IRA contributions this amount will transfer free from income tax, however you cannot transfer non-deductible contributions alone, and must calculate on partial transfers the percentage of non-deductible contributions will thereby be exempt first the percentage of total regular IRA value.

Roth conversions are one of the few things that can be undone if it is discovered before the due date of the tax return including extensions on which the income will be reported from the conversion. This means if before you file your tax return you find the conversion was not favorable to you due to changes in the tax law or how your investments performed the conversion can be undone or re-characterized. Complex roles exist governing how re-characterization must be done when converting back from a Roth IRA to a traditional IRA.

Before making the decision to convert it is best to consult your tax advisor and your investment advisor. Carefully work through with your advisors what the conversion will mean in current taxes, future savings and growth of your investment. Remember to take advantage of what may be the last year of the Bush tax cuts and current lower tax rates you must act on before the end of 2012.

Help Wanted

Accountant / CPA / Enrolled Agent

Busy accounting firm looks for Accountant, CPA or EA for year round position. In business for over 25 years and still growing we are looking for a full time year round professional. 

The right person will be a team player, work well with others and be able to analyze and complete the accounting, bookkeeping and tax needs of small business clients and individuals.


  • Bachelors in Accounting
  • 3 to5 years Accounting experience
  • Proficient with QuickBook, MS Office and MS Excel
  • Understanding of tax preparation software
  • Ability to supervise others and complete assignments
  • Understanding of small business accounting & clients

Essential Duties and Responsibilities:

  • Provide supervision and support to bookkeeping staff
  • Special projects involving account set-up  and review
  • Preparation and review of sales tax and payroll tax returns
  • Tax Preparation forms; 1120, 1120S, 1065 1040
  • IRS correspondence  and tax notice communications


  • Salary, bonus, paid vacation, paid sick time, health insurance, life insurance and more.

To Apply:

  • If you meet the above requirements and are able to fulfill the essential duties and responsibilities and you know that you can “make it happen” in this exciting opportunity, please send your resume along with your salary history and salary requirements to

Tax Death Star

George Lucas Avoids Tax Death Star!

With the 2013 expiration of the bush tax cuts 1/1/13 brings the end of the 15% rate on long term capital gains. This may be one of the reasons for the recently announced sale of Lucas Film Company to Disney.

On the 4.05 billion dollar sale amount the savings on capital gains alone is more than 202 million dollars, this calculation is based on just a 5% increase in the long term capital gains rate from 15% to 20% which takes effect on 1/1/2013.

Add to this additional Medicare tax surcharge of Obama Care and you are talking about more than just pocket change.

It turns out the Empire did not have near the power of the Federal Income Tax Code.