You may have heard that the new tax law eliminates the $100,000 income limit for Roth conversions beginning in 2010.  If you haven’t been able to contribute to a Roth IRA because your income is too high, you now have a back door into the Roth IRA. 

You should start planning now to take full advantage of the new tax law.  How?  Contribute the maximum to a non-deductible IRA now (and every year up to 2010).  The limit in 2006 is $4,000 ($5,000 if you are 50 or older). 

In 2010, when the income limit for Roth conversions goes away, you can convert your traditional IRAs to Roth IRAs.  Because you made non-deductible contributions, only your earnings will be subject to income tax. 

Even better, taxes owed on conversions made in 2010 don’t have to be paid until 2011 and 2012, which allows you to spread the tax burden over several years.

What are the benefits of this strategy?  Tax free income in retirement, no Required Minimum Distributions at age 70 1/2, and tax free income for your heirs. 

Need help determining if this is the right strategy for you?  Check out or Tax Review.