IRA CD Accounts

Now may be the best time to convert to a Roth IRA CD.

New!

2010 Roth IRA Update

What has changed?

  • Federal income limits on conversions have been removed. Now you can convert some or all of your retirement funds to a Roth IRA even if you earn over $100k1.
  • Tax payments on conversions can now be paid either upfront or spread over two years, 2011 and 20122. The option to divide the payments makes it easier to cover the costs associated with conversion.

Which types of plans are eligible for conversion to a Roth IRA?

  • IRAs: Traditional, Rollover, SEP and SIMPLE3.
  • Qualified employer sponsored plans4, including 401(k), 403(b), 457(b), pension, stock bonus, and profit sharing plans

Ask a tax professional or financial advisor if a Roth IRA is the right choice for your retirement plan. Then, call our Banking Specialists or convert your account online. With the new 2010 Roth IRA rules, it's a great time to convert to a high-yield Discover Bank Roth IRA CD.

Roth vs. Traditional IRAs

Roth IRAs: funded with taxable dollars, withdrawals are tax-free

Traditional IRAs: funded with pre-tax dollars, withdrawals are taxed as regular income

1. Before 2010, conversions of traditional retirement accounts to Roth IRAs were restricted to households with adjusted gross income (AGI) under $100,000.

2. Before and after 2010, taxes owed on pre-tax contributions and investment gains in tax-deferred accounts converted to a Roth IRA must be paid in the year the conversion takes place. For 2010 only, taxes owed on pre-tax contributions and investment gains in tax-deferred accounts converted to a Roth IRA in 2010 may be spread over two years (2011 and 2012). However, your contribution may be reduced or eliminated depending on your modified AGI. Consult your tax advisor on these rules.

3. SEP IRA plans must have been in existence for two years in order to be eligible for conversion to a Roth IRA.

4. For employer sponsored plans to be eligible for conversion, a distributable event is required.

5. The values shown in the calculator are for illustrative purposes only and are not intended to apply to your individual circumstances.

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