Do you remember May, 2006?  Over 100 birds dropped dead in China and we were all worried about the avian flu.  President George W. Bush was on the cover of Rolling Stone with a headline questioning his status as history’s worst POTUS.  Bernie Williams was still playing for the Yankees and the Congressionally-passed Tax Increase Prevention and Reconciliation Act (TIPRA) quietly became the law of the land.

Embedded within the dense legislation were provisions changing the Roth IRA rules.  You may not have noticed at the time.  That’s understandable, because some of the actual changes mandated within the Act weren’t schedule to kick in for years.

Now, 2010 is right around the corner.  We’re preoccupied with H1N1 and the bird flu has joined SARS on the list of “really bad things that didn’t really materialize.”  President Bush is splitting time between his ranch and the motivational speaking circuit.  The Yankees didn’t re-sign Williams and now he’s off playing guitar somewhere.  Oh, and those TIPRA changes are about to kick in–and it’s a good idea to start paying attention.

That’s because the law is making the retirement account option more accessible.  Previous limitations on Roth IRA participation are being cast away.  That’s important news if you’ve been unable to take advantage of the Roth option and now can.  Why?  Because they are one of the best deals around.  The Entrust New Direction Blog explains:

The Roth IRA is quite possibly the best deal the federal government has ever offered tax payers.  But until 2010, this fabulous deal was only offered to people earning less than (approximately) $100,000.  Not so in 2010.  The federal government has announced a suspension of the rules for 2010.

The Roth IRA is like the pot of gold at the end of the rainbow. You can rollover any amount of money from a traditional IRA or 401(k) into a Roth IRA, and every dollar you earn with that money is TAX FREE.

SeacoastOnline outlines an even longer list of benefits associated with a Roth account:

No required minimum distributions for those 70½ or older.

No limit on the amount that can be converted.

No limit on the number of conversions.

Ability to re-characterize if desired.

Potential tax-free compounding.

Potential tax-free income distributions for the Roth owner and named beneficiaries.

Potential tax-free wealth accumulation for heirs.

The problem for many people was the fact that the Roth IRA rules restricted use of the account to those who had a MAGI (modified adjusted gross income) of over $100,000.  That limitation is now history, thanks to those TIPRA changes.  As a result, as many as 13 million Americans now have a chance to convert their traditional IRA to a Roth or to open a new Roth account.

If you’re part of that 13 million, it’s time to get a Roth Started.  Not only are the accounts a strong option, they’re even more attractive due to the current economic situation.  GoodFinancialSense notes that, “The market is still in a recovery phase and you could benefit from converting when your account balances are lower and pay less income tax.”  As an article in Kiplinger’s Personal Finance argued:

“Roth IRA conversions are the silver lining to the economic crisis,” says IRA expert Ed Slott, a CPA in Rockville Centre, NY.  “The may be the lowest tax rates you’ll see for the rest of your life.  And with account values down, it’s a double sale.”

If you don’t have a Roth IRA, you need to consult with your adviser and/or investigate the Roth IRA rules to see if you can make use of this powerful retirement savings options.  The 2010 conversion and the elimination of the MAGI-based restriction aren’t the only Roth IRA rules to have changed and you’ll want to know all of the gory details before making any changes.  However, overall these changes appear to make Roths more accessible and more attractive than ever.