If you’ve always longed for a Roth IRA (the kind where money is taxed going in but not coming out), 2010 could be your big chance, even if you were previously ineligible. ?

?Starting this year, you can convert a traditional IRA into a Roth, regardless of your income. Doing so may or may not be a smart move, as we explained in this article.?? ?

You’ll still face income limits if you want to open a new Roth account (eligibility phases out totally above $120,000 modified adjusted gross income for single filers, $177,000 for couples filing jointly). However, if your income exceeds that, you aren’t completely out of luck, thanks to the new conversion rules. You can first open a traditional IRA and immediately convert it into a Roth.

??For example, you could open a traditional IRA and make a nondeductible contribution to it, regardless of your income and even if you’re covered by a retirement plan at work. If you don’t have any other IRAs when you make the conversion, you’ll be liable for additional tax only on any amount by which that IRA has appreciated, according to tax attorney and author Julian Block. ?

If you do have other IRAs, however, you won’t get off so easy. After opening the IRA you intend to convert, you’ll have to add up the total value of all your traditional IRAs and pay tax on a prorated portion of the money you’re moving to the Roth. (The untaxed portion will represent any nondeductible contributions you’ve made, as a percentage of the total, so you don’t pay tax on them a second time.)

?If you’re in that second category, some professional tax help would probably be money well spent. To do it yourself, the relevant (but sometimes difficult) tax booklet is IRS Publication 590, and you’ll also need to master Form 8606 (instructions here). ??

—Greg Daugherty

Greg writes the “Retirement Guy” column each month in theConsumer Reports Money Adviser newsletter.

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