If you have money in traditional IRA accounts and would like to convert them to Roth IRA's, 2010 is the year to do it!  Prior to 2010, you could only convert from traditional to Roth IRA if your adjusted gross income was below certain limits.  For years beginning after 12/31/2009, these limits have been eliminated.  "Why would I want to do this?", you ask.   "And won't I have to pay tax on the converted amount?"

Roth IRA Advantages:  Once in a Roth IRA, the contributions and all the earnings are tax free FOREVER!  There is NO required minimum distribution in your lifetime.  Inherited Roth IRA's are not taxable to your heirs.  You can continue to make contributions past age 70 as long as you have earned income.

Tax Payment:  Yes, tax will be due on the amount of the conversion that is taxable.  If all of your contributions to the traditional IRA were deductible, then the full amount of the conversion will be taxable.  If you made nondeductible contributions, you will be taxed only on the earnings.  For conversions made in 2010, the default position is that the taxable amount will be treated as 50%having been received in 2011 and 50% received in 2012; thus you would be taxed at whatever rates are effective for those years.  However, you may elect to treat the income as being received in 2010 and pay all of the tax in 2010.  It will be important to crunch all the numbers considering that tax rates in 2011 and 2012 may well be higher than in 2010.

For What It's Worth:  I am converting my traditional IRA's to Roth IRA's immediately and I will pay the tax in 2010.  Of course, it is important that you are able to pay this tax with money that is outside the retirement accounts.

Further information is available on the IRS website at www.irs.gov.