"While choosing an appropriate income tax rate for future tax years is more of an art than a science, choosing an appropriate income tax rate for the Roth IRA conversion in the conversion year is much more analytical. When analyzing a Roth IRA conversion, one cannot simply use a "marginal" income tax rate to determine the income tax liability.

"This oftentimes results in a higher tax liability on the conversion than what would otherwise actually be incurred. Other than for taxpayers already in the highest marginal income tax bracket (i.e. 35% in 2010), most conversions will 'slide' through various tax brackets. Thus, one must look at the 'incremental effective' income tax liability caused by the conversion."

Also, Keebler said AMT can pose a problem for the unaware. "One of the most perplexing issues encountered when analyzing Roth IRA conversions is the impact that the AMT, and any of its related tax credits, has on the conversion decision," he wrote.

"Interestingly enough, while the AMT is something that certainly needs to be considered, most taxpayers (and their advisors) only look at Roth IRA conversions from an ordinary income tax perspective. As a result, many times taxpayers are lulled into believing that a Roth IRA conversion makes sense when in fact it may not make sense from an AMT perspective.

"Conversely, there are instances when taxpayers are led to believe a conversion does not make sense, from an ordinary income tax perspective, when it actually does make sense from an AMT perspective," he said.

And though not a mistake, Keebler also said taxpayers now must consider the new Medicare surtax. The Patient Protection and Affordable Care Act and the reconciliation bill added a number of new tax provisions to the Internal Revenue Code, perhaps the most significant change from a tax planning perspective is a new 3.8% surtax on the lesser of net investment income or the excess of modified adjusted gross income over a threshold amount, according to Keebler.

That tax, when combined with the expiration of the Bush-era tax cuts in December 2010, will move the highest marginal rate from 35% to 43.4%. Given that, Keebler is of the opinion that Roth conversions from 2010 through 2012 will help many taxpayers reduce their exposure to the new surtax.

In addition, for those who are potentially subject to estate tax, there can be significant tax advantages to converting to a Roth IRA prior to death, Keebler said. "When modeling Roth IRA conversions, one must factor in the potential impact that estate taxes will have on the conversion equation," he said.

Though a bit complicated, the gist of it is this: When a taxpayer with a regular IRA dies, the estate or the beneficiaries end up paying income tax on what's called income in respect of a decedent (IRD). The good news, according to Keebler: "To the extent that a decedent's estate is subject to estate tax, the decedent's estate (or its beneficiaries) will be an income tax deduction for the federal estate tax paid on the IRD."

Many IRA owners apparently fail to crunch the numbers when doing the Roth IRA conversion calculation.