• Individual retirement account conversions take your retirement fund from a traditional IRA to a Roth IRA. According to Forbes.com, you should carefully consider whether such a conversion is in your best interest. The big difference between a Roth IRA and a traditional IRA is whether you pay income tax on your retirement savings now (Roth) or when you retire (traditional).
  
  

Making the Conversion

• When you convert from a traditional to a Roth IRA, you must pay taxes on your distribution from the traditional IRA. You then put what's left into your Roth IRA. Once in the Roth, your savings will grow tax-free. Starting in 2010, says Forbes.com, income restrictions on traditional-to-Roth conversions were eliminated, and taxpayers are allowed to spread the tax on such conversions over two years. You also could spread out the tax bite by making partial conversions over a period of several years.
  
  

Considerations

• In theory, the up-front tax on the Roth IRA and the deferred tax on the traditional IRA should leave a taxpayer in the same position, according to Forbes.com. In reality, there are certain considerations that affect whether it's better to pay the tax now or in the future.
  
  

Predicting Direction

• For instance, if you believe your tax rate and tax bracket will be higher in future than they are now, then converting to a Roth today means you'll be paying less tax on your retirement money. You also can hedge by converting only part of your traditional IRA, so you have both a traditional and a Roth IRA.
  
  

Leave a Legacy

• A traditional IRA requires that you start taking a minimum annual distribution at age 70 1/2 but there's no such requirement with a Roth IRA , so you can delay taking money out or leave all your retirement savings untouched in the Roth account as a legacy to your heirs.
  
  

Hindsight

• If you make the conversion from a traditional to a Roth IRA this year and later realize the conversion was a mistake, you have until Oct. 15 of next year to reverse the transaction and put your money back into the traditional IRA without tax or penalty, according to Forbes.com.