All retirement savers, regardless of income level, will get a chance in 2010 to convert their regular IRA into a Roth IRA. Congress has removed the income limits for Roth conversions in 2010.

The key benefit of converting to a Roth is that you'll pay taxes now in exchange for tax-free withdrawals later in retirement, which seems like a pretty good trade-off given that most of us expect taxes to drift upward in the years ahead. (Some of you have been worrying that Congress could decide to tax Roth IRA withdrawals. There are no certainties, but in our view this would be a politically precarious step to take given that the Roth has been the province of middle-class investors for much of its existence.)

The Roth makes even more sense from the standpoint of estate planning. First, unlike traditional IRAs, the Roth doesn't require mandatory distributions, thereby allowing your assets to compound and increasing the amount you can pass to your spouse or heirs. Your heirs, in turn, will be able to receive tax-free distributions on those assets, and they'll also be able to accept distributions over an extended period, further stretching out the tax benefits and enabling those assets to compound on a tax-free basis.

The second key estate-planning benefit relates to estate taxes. Because you've already paid tax on Roth assets, the overall nest egg that you pass to your heirs will be smaller under the estate tax system, and therefore could help to reduce your estate- tax liability. The traditional IRA assets, by contrast, will be included in your estate-tax liability, even though your heirs will have to pay taxes on those assets. (Of course, the estate tax is another issue that will probably be revisited in Washington in the coming years.)

CAUTION! Don't convert your IRA without crunching the numbers, or you may be surprised with a large tax bill. But it is definitely worth the analysis. We would be happy to help you with this. Just give us a call at 801-377-9787.