Upper income taxpayers have become America's meal ticket. Federal, state, and even local governments are tapping taxpayers in the top brackets to fund a laundry list of projects and services . In 2007, the top 1% of tax returns paid 40.4% of all federal individual income taxes while earning only 22.8% of adjusted gross income.

There is growing evidence that this group is reacting to the fiscal equivalent of "overfishing."  Recent studies have pointed out that many high-net-worth individuals have fled high-tax states such as New York and California.

But few people would take such a drastic step simply to get a tax break, and the federal government would take its cut either way. So it is doubtful that these tax refugees concern Congress. What should worry Washington is how tax disincentives might disrupt the economy.   More 

Most financial planners and CPAs know the tremendous tax benefit a Roth conversion (in 2010) could bring about for wealthy Americans. Relative few, however, pay attention to a valuable option embedded with a Roth conversion.

What option?

According to the tax law, if one converts on Jan. 1, 2010, he gets until Oct. 15, 2011, to change his mind and reverse. This option to change mind is quite valuable if it is exercised properly.   More 

An arcane, outdated IRS Code once again creates an income tax nightmare for financial planners (and by extension our clients) concerning conversion of tax-deferred accounts to Roth IRAs. The rules for this conversion are ripe for errors, as the tax code is not specific or detailed in scope. Financial planners are urged to use extreme caution and begin planning now. Bringing competent CPAs on board as part of the decision team is strongly advised. The dilemma: to convert or not convert. Traditional IRAs, SEPs, Simple IRAs, and 401k plans to Roth IRAs.

Beginning January 2010, clients may receive all the benefits of a Roth IRA--no income requirements, tax deferral, and low balances in accounts due to the market meltdown (the recent market upswing withstanding). Further, the IRS Code provides for income tax to be paid over the next two years (2010 and 2011 and 2012) in a 50%/50% equal split for conversions. Tantalizing, yes, but does it make sense?   More