"Roth IRA conversions never looked so good as they do now," says Jones. Not only will 2012 conversions be taxed at rates no higher than 35%, today's slow economy may lead to a legitimately low valuation of illiquid IRA assets-and a relatively low tax bill. "IRAs must be valued each year," says Slott. "If a client is reporting a low value because of the weak economy, less tax will be due on a Roth IRA conversion."

Paying the tax from non-IRA investment assets can trim a client's taxable holdings, reduce future taxable investment income, and therefore reduce exposure to scheduled tax hikes as well as to the coming 3.8% Medicare surtax. After five years and after age 59½, all Roth IRA withdrawals will be tax-free. In essence, a Roth IRA conversion this year can move mega-IRA money from surtax straits into tax-free territory.

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