ROTH IRA's are a great reason to do some planning now in 2009.  Beginning in 2010 all IRA's and many other retirement accounts can be converted to a ROTH IRA.  There is no $100,000 income limit after 2009.  You need to visit with your financial advisors about whether this is a good short-term or long-term plan for you and your family.  Do it right and you will be glad you did this planning.  ROTH IRA's can give you the very best capital gain rate of all, ZERO, if the assets are held until age 59 1/2 and you have had a ROTH account for at least 5 years.

You can contibute new amounts to a ROTH or traditional IRA each year if you have earned income, but there are limits each year.  On the other hand, a conversion to a ROTH can move large balances out of a traditional IRA and into a ROTH IRA account.  You pay current income tax on any money in the traditional IRA just as if it were all distributed in that year.

A conversion to a ROTH IRA costs you income tax now, but may save you and your family much future income tax.  If your income may be lower in 2010, then may be an even better time to consider the ROTH.  Please note that it doesn't have to be an all or nothing decision.  It likely is a good decision to have some traditional and some ROTH.  ROTH's are beneficial for a couple of reasons.  Once you have held a ROTH account for 5 years and you are 59 1/2 or a first-time homebuyer, the contributions and earnings can come back to you tax-free!  This is even if you are earning a good income pre-retirement.  But the ROTH is even better if held long-term.  Young workers should start putting money in a ROTH account as soon as they have enough funds to cover their needs and appropriate emergency funds saved.  It is a good way to save for a down payment on a home.

In addition to a ROTH IRA, it can be a good thing to have some amounts in a traditional IRA account to save and defer income tax now.  The distributions for the traditional IRA can be spread out during your primary retirement years with the goal of minimizing the taxes, but give you some taxable income when your tax rate might be lower.  This taxable income might help you offset other deductions and exemptions that you may have in retirement.  With planning the taxes on the traditional IRA distributions can be controlled and kept low and yet the traditional IRA saved you income tax in earlier years.  It is best to have a financial advisor that will do some multiple year calculations that understands your investment balances, earnings potential and the way you want your future to unfold.