Roth and the Four Year Spread
Those of you deciding tomake a conversion in 1998 are eligible for a four year spread on paying the tax on the distribution from the Old IRA.
The election is not mandatory.
The election is not available after 1998.
If the person making this election should pass on before the income is fully included, the (untaxed) remaining income from teh conversionmust be included in the taxpayer's gross incomefor the taxable year that includes the date of his or her death.
However, if the
individual's surviving spouse is the sole beneficiary of all the person's Roth IRA's
(§408A(d)(4)(A)), the spouse may elect to continue application of the four-year
spread. The election is made by making the election on form 8606 or form 1040 for
the year of passing on and the election cannot be changed after teh ddue date
(including extensions) for filing the federal income tax return.
ALERT:
Another rule will trigger the inclusion of the entire amount into one tax year.If there is
a distribution of any amount attributable to a 1998 conversion to which the four-year
spread applies, that will accelerate the inclusion of any amoutn otherwise deferred to a
later taxable year.