Your IRA is falling- Now what?

If you have seen your traditional IRA take a nose dive due to the unstable stock market and you are wondering what to do next with your deflated value-there is a wise financial option at your finger tips, convert  to a Roth IRA. When you roll over traditional IRA assets to a Roth, you have to pay income taxes up front on the accounts value-but those values, and income tax rates, are both relatively low at the moment. With a Roth account, there are generally no taxes on withdrawals or any future earnings, unlike with traditional IRAs. There’s also no mandatory distribution schedule, again in contrast with traditional IRAs, from which account holders must begin taking minimum distributions by April 1 of the year following the year they turn 70.5 years old. Converting to a Roth could work well either as a year-end fix or as a way to plan ahead.

Legislation approved by Congress earlier this year waives any required withdrawals from traditional IRAs for 2009. That means you could roll over assets from a traditional IRA to a Roth without having to first take a mandatory distribution. So more of you assets could wind up protected from future taxes and withdrawal requirements.
To be eligible to convert traditional IRA assets to a Roth, your modified adjusted gross income must be no more than $100,000 a year, either for an individual or a married couple filing jointly. Neither a required IRA distribution nor a converted amount would count against that limit, but they still count as taxable income.

http://www.irs.gov/pub/irs-pdf/p590.pdf

In this down economy it is time to take advantage of the opportunities you have to ensure your future.