Federal Roth IRA Conversion Law Adopted for Wisconsin

​​​​On March 15, 2010, Governor Doyle signed 2009 Act 161. The pension and IRA contribution limits that will apply for the federal tax purpose for 2011 will also apply to Wisconsin.

All taxpayers may convert a traditional IRA to a Roth IRA, even in those cases where the taxpayer's adjusted gross income exceeds $100,000. No penalties will apply on the conversion.

Taxpayers who make the conversion in 2010 may postpone payment of tax on the converted amount until they file their 2011 and 2012 income tax returns or they may elect to report the entire taxable amount on their 2010 returns.

The pension and IRA contribution limits that will apply for federal tax purposes for 2011 will also apply for Wisconsin.

In addition, this Act also adopts certain provisions of the federal Heroes Earnings Assistance and Relief Tax Act of 2008. Among the provisions adopted are:

  • The treatment of qualified reservist retirement plan distributions.
  • Military death benefits may be contributed to Roth IRA or Coverdell ESA.
  • State or local bonuses for combat veterans are not taxable income.
  • Differential pay treated as wages for purposes of employer benefits.

Taxpayers who filed a 2008 or 2009 Wisconsin income tax return and adjusted for the difference between the Wisconsin and federal treatment of any of these items, may now file an amended Wisconsin income tax return (Form 1X) to reverse the adjustment. Taxpayers who have not as yet filed their 2009 Wisconsin income tax returns may ignore the Schedule I adjustment for these four items.

March 16, 2010