The questions keep rolling in about converting traditional IRAS to Roths. By Kimberly Lankford, Contributing Editor September 14, 2009 I've received several follow-up questions in the few days since I wrote my last column, about the new Roth IRA rollover rules. Here are some more answers.If I'm older than 59½ when I convert my traditional IRA to a Roth, will I be allowed to withdraw all of the money I convert right away without taxes or penalties? Yes ... and no. As soon as you convert, you can withdraw any part or all of the amount moved from a traditional IRA with no additional tax or penalty. (Remember, you pay tax on the converted amount when you make the switch.) If you withdraw any earnings from the Roth account before you meet the "five-year test," however, that amount will be taxed. (There would be no penalty, though, because you're older than 59½.) You'll pass the five-year test for a 2009 conversion on January 1, 2014 -- the beginning of the fifth calendar year after the year of the conversion. The IRS considers the first money out of a Roth IRA to be a return of contributions (tax- and penalty-free); next comes a return of converted amounts (always tax-free and penalty-free if you're at least 59½ or the account passes the five-year test); after all such funds have been withdrawn, then any money that comes out is considered earnings, which are taxed if you aren't at least 59½ and you haven't met the five-year test. What if I can't afford to pay the taxes on the full conversion? Can I convert just some of of the money in my IRAs? Advertisement You can convert as little or as much as you want in any taxable year that you qualify to convert. (For 2009, taxpayers with an income of more than $100,000 are barred from converting. That restriction disappears next year.) If you have ever made nondeductible contributions to your traditional IRA, part of any conversion will be tax-free. For example, if your total balance is $100,000, of which $20,000 represents nondeductible contributions, then 20% of any conversion would be tax-free. Also remember that if you make the conversion in 2010, then you can spread the tax bill evenly over your 2011 and 2012 tax returns. Am I required spread the tax payment on a conversion over my 2011 and 2012 returns, or can I include the income on my 2010 return? You have the option of including all of the conversion income in 2010. This could be a good idea if you're a high earner because the top income-tax brackets are set to rise after 2010, says says Rande Spiegelman, vice-president of financial planning for the Schwab Center for Financial Research (see Lots of Tax Hikes Coming in 2011 for more information). But it's not a simple decision, he says, because including all the income on your 2010 return will increase your adjusted gross income and could affect your eligibility for other tax breaks that have maximum income limits. Plus, your tax bracket could also be bumped to a higher level if you include all of the income in one year instead of over two years-and, if you're older than 65, you might have to pay higher Medicare Part B premiums if your income is above the limit for paying a Part B surcharge. (In 2009, the surcharge applies to individuals with a modified adjusted gross income of more than $85,000 and married couples with a modified AGI of $170,000 or more.) Advertisement If I'm older than 70½ when I convert a traditional IRA to a Roth, can I avoid taking required minimum distributions on the account? Yes, but not until the year following the conversion. Although RMDs are not required of the original owner of a Roth IRA, an RMD from a traditional account for the year of the conversion must be made prior to the switch. If you have money left in the Roth when you die, your heirs will be required to take RMDs from the account they inherit. On the bright side, that money will be tax-free to them. What steps will I need to take to make the conversion? Contact the administrator of your traditional IRA administrator after 2010 and ask to convert it to a Roth. The administrator can simply change the titling of the account; you won't have to sell any investments to make the conversion. See Switching to Roth Makes Sense Now for more information about the benefits of converting a traditional IRA to a Roth. Got a question? Ask Kim at firstname.lastname@example.org.