2010 Planning

While we are still working away on our 2009 goals, it is time to start thinking about our savings plan for 2010.

The maximum we can contribute to our 401ks remains the same - $16,500 each or $33,000 for both of us. Second, the maximum we can contribute to our IRAs also remains the same - $5,000 each or $10,000 for both of us.

So our 2010 savings goal will include two of the same goals that we are working on for 2009:
(1) Max out our 401ks - $33,000
(2) Max out our IRAs - $10,000

I have also been researching how to and whether it makes sense for us to convert all of/or part of our present IRA monies to Roth IRAs in 2010 (the income limits are to disappear in 2010). So that is also an item on our personal finance planning for 2010.

Mr. Sam's IRA conversion should be pretty easy because all of the money in his IRA was after tax money for which he took no deductions. So, said another way, he already paid taxes on all of the money in his IRA so he will only need to pay taxes on any gains.

I took tax deductions for about a quarter of my IRA money, however that money is still easily identifiable as its all in one index fund. So my tentative plan is to convert the other three quarters of my IRA money, all after tax money no deductions, to Roth IRA and therefore I'll only need to pay taxes on any gains.

The other issue is timing, we can convert our regular IRA to Roth IRA at any time next year and the value of the IRA on the actual date of conversion is the value used to calculate taxes. So, one wants to convert from regular IRA to Roth IRA when the value is at its lowest.