Part of the 2006 tax reconciliation bill is about to matter to many of us come January 1, 2010. It's sort of a good-news/bad-news deal -- but more good than bad for many. As of January 1, 2010, there will be no income limits for those who want to convert a traditional IRA to a Roth IRA. That's good because until that date, households with an adjusted gross income of more than $100,000 were barred from converting their IRAs to Roth IRAs and married spouses filing alone were barred regardless of their income.
Roth IRAs, for those of you in need of a quick review, are retirement savings accounts where you pay the income taxes due when you contribute to the account -- then, it grows virtually tax-free and your withdrawals are also tax-free (but you don't get the income tax deduction when you contribute the money).
So, for those of you whose traditional IRAs are now worth far less than they used to be worth (that's the bad news part), converting to a Roth IRA in 2010 could be a great idea: Since the account is now worth so much less, the taxes on the conversion will also be much less than they might have been, and if tax rates go up in the future, as many predict they will, you'll have already paid the taxes due on the account.
For a good article on the ins and outs of the new rules, see this article from the Wall Street Journal online.
To learn more about IRAs and other estate planning options, see The Mom's Guide to Wills & Estate Planning, by Liza Hanks (Nolo).