Let's talk IRA conversions!

[Mardi Gras Audrey]

Did anyone here convert their traditional IRA to a Roth last year?

I converted some of mine but not all (Long story short, I left my job last year to return to school. I rolled my 401k into an IRA and converted some of it to a Roth). My plan is to convert the rest a little at a time for the next few years (while I am a student and have minimal income). This will leave me with all my retirement savings in a Roth (vs pre-tax account).

Any thoughts on this? The talk of a VAT in the future has me concerned.... Do you think that it is best to convert now or pay income taxes later (FWIW, I am 31 so retirement will be in ~30 years)?

[Savoir Faire-Demogague in NJ]

I believe making as much conversions while your income is very low, you avoid most taxes. You are correct to be concerned about a national VAT tax replacing the income tax or in addition to it.
In fact, just last week there was a discussion on a national sales tax which will tax roth type accounts withdrawals, which have already been taxed.
I got into a discussion with a fellow poster who keep insisting pre-bate will be offered to compensate for this quirk. The poster went on to say prebates would only go to lower income individuals, but not higher income folk such as middle class individuals who have diligently saved.

[mesquite77]

I converted some in the 15% bracket, then got a sizeable bonus and scrambled in December for deductions. We ended up with a little bit of income in the 25% bracket. We are 33 max our Roths and a 401k.

[tractor]

I converted a portion of mine in 2010. It's going to give me a $9,500 tax hit, but spreading it out over two years will help ease the pain. I thought it would be a good way to at least get a Roth started. Now I have a Roth, 401k and traditional IRA to play with.