by Robert S. Keebler, CPA, MST
© 1998, Robert S. Keebler
1. Attach a list of all IRAs that may be converted.
2. List the birth dates of your client and beneficiary.
3. If your client is over 70½, list life expectancy elections.
4. If your client and his/her spouse are using the double recalculation life expectancy method, have you explained post-mortem ordinary IRA methods?
5. List all beneficiary elections.
6. Did you provide the client with a general memorandum on the Roth IRA?
7. Does the client understand the Roth IRA withdrawal provisions?
8. Does your client understand the Roth IRA provisions regarding the advantage of naming a new beneficiary after age 70½?
9. Will the client’s AGI be reduced below the $100,000 conversion limit in the year of conversion?
10. Have you accounted for minimum required distributions after age 70½?
11. Is the client married, filing a separate return? If yes, the client cannot convert regardless of AGI.
12. Is it likely that the client will die within the first five years?
13. How soon will your clients first need the funds from the conversion IRA?
14. Have you considered the technical correction proposals currently in Congress?
15. Have you considered the 10% pre-59½ penalty on distributions before five years?
16. Have you considered the 10% pre-59½ penalty on distributions after five years?
17. Does the client have outside funds (i.e., non-IRA) to pay the income taxes on the conversion to the Roth IRA?
18. Have you prepared a Roth conversion analysis for the client to review?
19. Have you considered a 1999 conversion?
20. What growth assumption have you used?
21. What income tax rate have you used?
22. Does your analysis take into account how the social security benefits will be taxed for federal and state tax purposes?
23. Have you reviewed the AMT implications of conversion?
24. Have you reviewed whether itemized deductions will be subject to the three percent rule?
25. Have you reviewed the state income and inheritance tax implications?
26. Have you reviewed the Roth IRA plan document?
27. Have you reviewed estimated state and federal income tax payments?
28. Does the beneficiary form consider whether the Roth IRA will be needed to fund the client’s $625,000 bypass amount?
29. If the Roth IRA beneficiary is a revocable trust, does the trust have a fractional funding clause?
30. If the client is over 70½, have you considered an irrevocable IRA trust?
31. Does your client have testamentary charitable intentions?
32. If yes, will ordinary IRA funds be available to fund the bequest?
33. Have you briefed your client on stretch-out IRAs?
34. Have you prepared stretch-out IRA projections?
35. Do you have a plan to fund the estate tax upon death of the Roth IRA owner?
36. Should you consider life insurance to fund the estate tax?
37. Should you consider an irrevocable life insurance trust?
38. Do the current tax apportionment clauses allow for taxes to be apportioned to the non-IRA residue of the estate or revocable trust?
39. Have you taken into account the community property tax implications?
40. Have you revised the client’s durable power of attorney form to include Roth IRA conversion language?
41. Have you and your client discussed investment allocations between ordinary and Roth IRA portfolios? (Note: Generally, stocks will be allocated to the Roth IRA portfolio.)
42. Does the appropriate state offer creditor protection for Roth IRAs?
This checklist is not all inclusive and is not intended to serve as tax or legal
advice. Individuals should consult with a skilled Practitioner.
Robert S. Keebler (of Schumaker, Romenesko & Associates, S.C., Green Bay, WI) is the author of an article that recently appeared in PPC's Practitioners Tax Action Bulletin, Income and Estate Tax Planning with the Roth IRA, and the AICPA book, A CPA's Guide to Making the Most of the NEW IRAs.