Tax Break for Conversion to Roth IRAs Lured 10 Percent of Millionaires, IRS Says

Congress dangled an incentive for high-income Americans to convert their tax-deferred individual retirement accounts into post-tax plans. The response was overwhelming.

Conversions from regular IRAs to Roth retirement accounts increased by more than ninefold in 2010, rising to $64.8 billion from $6.8 billion in 2009, according to data released today by the Internal Revenue Service.

That marked the first time that Roth conversions were greater than contributions. Conversions were particularly common among IRA holders with annual incomes exceeding $1 million. More than 10% of them converted to a Roth account, according to the IRS.

The increase in conversions stemmed from ...