If your income is $100,000 or less and you are single or married, filing jointy, you may be eligible to convert your traditional IRAs to a Roth IRA in order to take advantage of federally tax-free earnings in the future.

You will generally pay ordinary federal income tax (but not the 10% penalty tax) on the taxable amount that is converted. Your tax-free potential is maximized if you pay the taxes from your current income or personal savings, not your IRA.

Assumptions Current age   Age when income should start   Number of years to receive income   Before-tax return on savings: (% - accumulation phase) Before-tax return on savings: (% - distribution phase) Income tax bracket: (% - accumulation phase) Income tax bracket: (% - distribution phase) Current IRA balance   Non-Deductible portion of IRA balance   How will you pay the conversion tax? 1) Pay taxes from non-IRA assets 2) Pay taxes from proceeds of Roth conversion Option 1 Option 2   Delay tax payments until 2011 and 2012? No Yes