It seems that everyone I speak with these days has gone through or is going through major changes in their lives. Most of these people are now turning their concerns to the future. With the U.S. deficit rising out of control, the topic on everyone’s mind seems to be not only what to do about their investments but how to not get hit hard with future taxes. 

One technique that is available to help ease that future tax burden is the Roth IRA. 

Remember that an IRA -- Roth, traditional IRA, 401(k), SEP or Simple -- dictates the rules on how you pay taxes on the investment you choose. You can still make adjustments to your investments so long as you keep them labeled as an IRA.

The surge in interest about Roth IRA conversions is hardly surprising, considering that starting this year, all taxpayers regardless of income are eligible to convert tax-deferred retirement assets to a Roth IRA. Prior to the change, the law prevented taxpayers with household incomes above $100,000 from converting assets to a Roth IRA. This will affect many of you captains out there.

If you are among the nearly 50 percent of Americans who believe their taxes are going to increase in the future, you may be interested in the possibility of the tax-free income that a Roth IRA conversion can bring you. 

A Roth IRA is a retirement savings vehicle that differs from tax-deferred retirement accounts such as traditional IRAs and most employer-sponsored retirement plans. With a Roth IRA, you make contributions with after-tax dollars, but qualified withdrawals after age 59½ are tax-free. 

Furthermore, a Roth IRA does not require minimum annual withdrawals after age 70½. It should be noted that there are still annual income limits in place for determining eligibility to contribute to a Roth IRA. The income limitation was eliminated only for conversions.

Be aware that some taxing questions should be considered when you convert tax-deferred assets from a traditional IRA and/or a former employer’s 401(k), 403(b), or 457 plan. The amount you convert in a given year needs to be declared as income on your tax return. Remember you never paid taxes on that money that went into those IRAs. 

 If you are younger than 59½ and will pay the taxes from money that has been converted, plan this out and do this based on what you feel your current and future income will be. In other words if you have a loss or a low income year due to being between jobs then this would be a good year to do a Roth conversion.

Fortunately, you have other options when it comes to paying the taxes on a Roth IRA conversion. In 2010 only, you can convert eligible retirement assets to a Roth IRA without having to claim the amount as income on your 2010 tax return. If you elect to do this, you must declare half of the converted amount as income in 2011 and the other half as income in 2012. In this way, you wouldn’t have to start paying taxes on a 2010 Roth IRA conversion until April 15, 2012.

However, by deferring the taxes on a 2010 conversion, the converted amount will be taxed at the income tax rates in effect in 2011 and 2012. As it stands, tax rates are scheduled to increase in 2011. Unless Congress acts to avert the tax rate increase, the taxes on Roth IRA conversions will be higher after 2010. Having said this, you may want to speak with your financial adviser and CPA to help figure out what may be best for your individual scenario. 

Also consider whether converting a sizable amount to a Roth IRA could move you into a higher tax bracket. If so, you may decide to convert smaller amounts over several years.

If you have IRAs into which you have made both deductible and nondeductible contributions, the tax implications of a Roth IRA conversion can become complicated. It may be prudent to consult a tax professional.

Roth IRA conversions offer the potential for tax-free income in retirement for taxpayers at all income levels. If you want more information about converting to a Roth IRA, call a trained professional. It’s critical to review your individual situation before making a decision about moving important assets.

Information in this column is not intended to be specific advice for anyone. You should use the information to help you work with a professional regarding your specific financial objectives.