Question 5: Should I Convert to a Roth IRA?

For the first time, if your annual income exceeds $100,000 you can convert a traditional IRA (as well as a SEP IRA, Simple IRA or 401(k) or 403(b) plan held with a former employer) to a Roth IRA and take advantage of its many benefits. But make no mistake: A Roth conversion doesn't make sense for everyone; you'll have to ponder a few variables. In a recent survey, TDAmeritrade found that nearly half of its clients who are newly eligible to convert remain undecided. The subject is that confusing.

Consider future tax rates. 

However, a lot of people — a stunning 86% in the TDAmeritrade survey — believe it is now likely that their income taxes will go up in retirement, largely because of the huge deficits the nation is running as a result of the recession, financial crisis and war. If a higher tax rate looms, converting to a Roth now may make sense. A Roth has another tax advantage in that withdrawals do not count as income against the taxable level of Social Security benefits, which is not the case with a Traditional IRA.

Time Magazines The Five Big Questions About Retirement Planning