Beginning in 2010, income limit restrictions for individuals who want to convert their Traditional IRA to a Roth IRA will be removed.  Previously, Traditional to Roth IRA conversion eligibility was restricted to single income tax filers or married couples filing jointly with modified adjusted gross incomes no higher than $100,000. 

Effective January 1, 2010 this income limit restriction was also removed for individuals wishing to rollover a distribution from their retirement plan into a Roth IRA.  This applies to distributions from tax-qualified retirement plans, tax-sheltered annuities and governmental 457 plans.

Individuals who convert a Traditional to a Roth IRA must pay taxes on the amount of the conversion that is attributable to their deductible contributions and earnings.  In other words, you have to pay taxes on whatever money you put in your Traditional IRA that wasn't taxed when you put it in and you have to pay taxes on the money you've earned on the IRA.  However, if you convert your Traditional to a Roth in 2010, the IRS will permit you to pay the associated tax liability equally in 2011 and 2012.

The maximum IRA contribution limits remain the same for 2010 at $5,000 for individuals under age 50, and $6,000 for those over age 50.  Of course you don't have to contribute the maximum.  Any amount you save in an IRA will help with your retirement.  If you can only start with $500 or $1000 per year when you are young, the more time it has to grow before retirement.  Contributions made right before retirement are great but they won't have as much time to grow.  Most importantly, save something for retirement.

For complete details on tax consequences please consult your tax advisor.