In recent years, vast numbers of people have become eligible toconsider Roth conversions. They includehigh-income people who were not eligible for Roth conversions prior to 2010 andmillions of people who have become eligible to convert money toemployer-sponsored Roth 401(k) accounts since they became availablein 2006.

At least once every two years, financial advisors should have a“conversion conversation” with clients, to review and evaluateconversion options:

• From Traditional IRAs and SEP-IRAs to Roth IRAs

• From SIMPLEs to Roth IRAs, after two years of planparticipation

• From employer-sponsored plans to Roth accounts offered within theseplans

The conversation need not be complex or lengthy, because thereare just four key points that usually prevail in conversiondecisions. Here's the conversation, in a nutshell:

“Mr. and Mrs. Client, if you would like to consider convertingpart or all of your plan money to a Roth, there are four key issuesyou should evaluate.

Key #1 – Liquidity – To make the conversionwork, you generally need enough liquidity to avoid tapping the RothIRA for at least five years. To keep all your retirement planassets working, you may want to pay the income taxes (on theconversion) with other money.

Key #2 – Income Tax Rates – If you think incometax rates will go higher in the future, a conversion can beattractive because it lets you lock in today's tax rates. It'simportant to plan conversions so that they don't push your taxableincome into a higher bracket, or subject your net investment income(excluding retirement plan income) to the 3.8% Medicare tax.

Key #3 – Retirement Freedom and Flexibility –How do you want to spend retirement? Choice A: Youcan estimate the required minimum distributions due each year(after age 70 ½). Choice B: You can write yourselfa tax-free check from your Roth if and when you need it, and neverface a required distribution as long as you live. How important isthe quality and simplicity of retirement living for you?

Key #4 – Leaving Your Heirs “No Tax Strings” –With a Roth conversion and a little planning, you can make sureyour beneficiary inherits an IRA with no income tax stringsattached. This is opposed to leaving the beneficiary a TraditionalIRA or 401(k) that could be fully taxable as ordinary income.

To brush up on the rules for Roth conversions, you may want tocheck the IRS FAQs on Roths.