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WASHINGTON — Congress dangled an incentive for high-income Americans to convert their tax-deferred individual retirement accounts into post-tax plans. Their response was overwhelming.
Conversions from regular IRAs to Roth retirement accounts increased more than nine times in 2010, rising to $64.8 billion from $6.8 billion in 2009, according to data released Friday by the IRS.
That marked the first time Roth conversions were greater than contributions. Conversions were particularly common among IRA holders with annual incomes exceeding $1 million. More than 10 percent of them converted to a Roth account, the IRS said.
The increase in conversions stemmed from a 2006 law that set 2010 for ending a $100,000 income limit on Roth conversions. There’s no ceiling on conversions if an investor has multiple IRAs and no cap on the amount that can be shifted.