Due to a recent rules change, every American - no matter their income level - can convert an existing IRA into a Roth IRA.  The advantage of a Roth IRA over a regular IRA is that the Roth IRA grows tax-free, while a regular IRA grows tax-deferred. This means that distributions during retirement from a Roth IRA aren't subject to tax, while those from a regular IRA.

Another advantage of the Roth, potentially of great benefit to the affluent, is the lack of required minimum distributions from the account.  After age 70 1/2, you must begin to take money (and pay tax) from your regular IRA

Of course, there's a bit of a hitch to convert.

To convert your regular IRA into a Roth IRA, you must pay income taxes based on the value you convert (less and after-tax contributions you may have made previously.)  That can be expensive.

What should you do? There are many factors including:

• your current and expected future tax rates (good luck knowing the latter)
• your expected rate of return
• how much (and how fast) you expect to need to take money out of your IRA during retirement
• whether you'll be able to pay the taxes due with assets that are NOT part of your IRA.

Fortunately, there are a number of calculators out there, including this one. For more information, read Roth IRA Conversions in 2010 - No Income Limit.

You can convert your IRA into a Roth IRA originally appeared on About.com Retirement Planning on Thursday, January 7th, 2010 at 08:28:20.

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One of the better kept tax "secrets" related to retirement planning is the Credit for Retirement Savings Contributions.  Although it is not available to all taxpayers, as it focuses primarily on lower wage earners, it serves a critical purpose.  Regardless of your income, learn about the credit - perhaps it may apply to your younger sibling, child, grandchild, or workplace subordinate.  You just might make someone's day (not to mention their retirement.)

Retirement saver getting ready to file your taxes? originally appeared on About.com Retirement Planning on Friday, January 22nd, 2010 at 10:25:08.

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Most people, appropriately enough, take the retirement plan contribution limits for granted.  Who could blame them?  It's not like you get to set your own - Congress just hands them down. But this is the web and a site devoted to retirement planning ought to be a decent forum for retirement planning topics. With that in mind, I created a special place here at About.com Retirement Planning where you can share with me your thoughts on the limits.  Are they too high? Are they not high enough? Of the $5,000 limit (or $6,000 if you're 50 or older), how much do you save each year?

I look forward to hearing your thoughts over here.  Furthermore, if there are other topics you'd like to discuss related to retirement, please comment below and share them.  Thank you for being part of our community!

What do you think about the IRA contribution limits? originally appeared on About.com Retirement Planning on Friday, January 29th, 2010 at 10:45:24.

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Do you think about retirement frequently?  I think about retiring occasionally, but I'm blessed as a naturally happy individual with a good deal of autonomy in my personal and professional life.  Of course, others' might view too much autonomy as stressful rather than a blessing.  Such people might be counting down to retirement despite being decades away.  But not me.

Yet I still do think about retirement - just not for the reason of being able to stop working. I think about retirement because it is the ultimate financial stretch-goal. By definition, it is long-term and it requires a good deal of money (or guaranteed income) to pull off.

All of this got me to wondering . . .

How often do you think about retiring? originally appeared on About.com Retirement Planning on Friday, February 5th, 2010 at 01:31:37.

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In the next few weeks, millions of Americans will receive their Form W-2 from their employer.   While distributed for tax purposes, this form has some clear retirement planning implications as well.  If you contributed to a 401(k) or 403(b) plan, you'll see your contributions described in Box 14.  If that number is big, give yourself a pat on the back.  (Then, ask yourself if you can make it bigger next year.)

If you see nothing in box 14 but the center square in Box 13 is checked, you're missing a golden opportunity - you're not saving for your retirement even though you have a workplace retirement account.   Furthermore, because you were eligible for a workplace retirement account but did not participate, you may not be able to deduct your traditional IRA contribution.

Another little exercise when your W2 form arrives. Notice the difference in the amounts listed in Box 1 vs Box 5.  You pay income tax based on what's in box 1.  Your true compensation is reflected in box 5, yet box 1 might be lower. That's a good thing, since the lower income means lower tax.  Why the difference? Most of it is because of those 401(k) contributions.  I told you before you'll save on taxes with a 401(k) contribution. Now you can see how.

What a W2 can teach you about your retirement planning originally appeared on About.com Retirement Planning on Friday, January 15th, 2010 at 15:41:19.

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