2010 is the year of the Roth conversion! What is a Roth IRA? It is a retirement plan containing after-tax money / investments. Investments in the Roth and withdrawals from it will never be taxed, as long as money has been there for at least 5 years and you satisfy one of the following: attainment of 59 ½, death, disability, or first-time home purchase. You can fund a Roth IRA with a variety of investments, and therefore defer any combination of interest, dividends, or capital gains from taxes.
Doing a conversion from a traditional IRA to a Roth IRA requires paying taxes on the amount converted. So why would you want to pay tax now rather than later? You can save tax money - in the long run - three different ways: