Re: IRA and 2010 Roth IRA conversion
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When you leave a job, you typically have 60 days to declare what to do with your 401(k). Typically, people do a rollover to a Traditional IRA. It is similar to the 401(k), in that it is tax-deferred.
From there, you can convert it to a Roth at any time (at which point you will pay taxes on the amount the following April). You can only convert it to a Roth IF you do not meet the maximum Adjusted Gross Income amount.
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Assume a person rolls a 401k into a traditional IRA then converts to a roth IRA. I'm assuming taxes would be due on just the investment income when the person converts from the traditional to the Roth, right? As you mentioned they must also be below the MAGI requirement.
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Converting a 401(k) (tax-deferred) to a rollover IRA (tax-deferred) to a Roth IRA (post-tax) would require you ot pay taxes on teh entire amount. Contributions, and earnings.
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