Retire without taxes

Only one savings plan gives you the chance to free yourself from taxes in retirement. Are you making the most of it?

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6. Can I move my old IRAs into a Roth?
Indeed you can, by simply transferring your traditional IRA into a Roth IRA. This year and next you'll have to meet income-eligibility rules - your modified adjusted gross income (whether you're single or married) can't exceed $100,000 the year you convert.

Two years ago, though, in a burst of magnanimity (that will also raise tax revenue), Congress eliminated the income test starting in 2010. At that point, you'll be able to convert regardless of how much you earn. This legislation doesn't change the income-eligibility rules for making annual contributions to a Roth, but it does provide an easy way around them: Open a deductible IRA (if you qualify) or nondeductible IRA (which anyone with earned income can do) this year and next and then convert to a Roth in 2010.

Of course, the U.S. Treasury isn't going to just let you skate on a tax bill by shifting money into a Roth. When you convert, you'll owe income taxes on the rollover, although if your conversion includes nondeductible IRA contributions, you won't owe taxes on those amounts again. As to whether it pays to make the change, the calculus is virtually the same as deciding between contributing to a regular 401(k) or IRA and a Roth: It all comes down to taxes now or taxes later. To run the math, use the conversion calculator at

NEXT: Can I convert my 401(k) to a Roth?
Last updated September 16 2008: 11:34 AM ET
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