Now for conversions: You declare all or part of a traditional IRA as taxable income now, pay federal and state tax on that amount and then convert the moneyinto a Roth.
Choate suggests that older couples with large traditional IRAs try to convert some of that moneyinto a Roth IRA. You pay tax immediately on the full amount converted, but any further growth is tax free.
The other notable news for savers is that the Congress expects to raise some money in the short term by allowing more people to convert 4o1(k) savings into Roth IRAs.