IRS Ends Breaks on Multiple IRA Conversions

The Internal Revenue Service is closing the door on a strategy that allowed investors to lower their taxes by making multiple conversions between regular individual retirement accounts and the new Roth IRAs. Financial advisors have been telling clients that they can undo a conversion to a Roth IRA from a traditional IRA and then reestablish the accounts during the same filing season. That allows investors to take advantage of drops in the value of their portfolios to lower tax payments on the conversions. Now the IRS says investors can perform the transaction only once in 1998 and once in 1999. The rules take effect until Nov. 1.