In Chinese astrology, 2010 is the Year of the Tiger; in financial planning, it might as well be the Year of the Roth Conversion. Since Jan. 1, individuals with more than $100,000 in annual income (and couples with more than $176,000) have been able, for the first time, to roll over their money from traditional IRAs into Roth accounts. That change has made so-called Roth conversions available to an additional 13 million households with $1.4 trillion in IRA assets, according to the retirement planning firm Convergent; and, with so much at stake, banks and brokers are urging investors to hop on the bandwagon. By far, Roth conversions are the biggest item we are looking at for our clients, says Robert DiQuollo, a certified financial adviser at Brinton Eaton Wealth Advisors in Madison, N.J.

The new rollover rules coincide with trends that can make a Roth look like a cure-all for higher earners. There s a legacy angle: Roth accounts are a better deal than traditional IRAs if they re passed on to heirs. Converting retirement assets to a Roth could help some middle-class earners dodge the alternative-minimum tax. But above all, converting now is a bet that taxes in general will soon get much, much higher. At the end of this year, the lower capital gains taxes passed under George W. Bush are scheduled to expire and the top federal income-tax rate could jump from 35 percent to 39.6 percent. With government deficits soaring, state and federal governments may raise taxes even further. The question is not if, but when they go up, says John Ellis, a certified public accountant in Long Beach, Calif. Small wonder, then, that some savers want to spare their nest egg from the bite of Uncle Sam.

But we are talking about the tax code, of course, so no good news comes without complications. Despite buzz to the contrary ( Roth For All? reads one ad campaign), many investors won t qualify for the rollover or be able to afford it. Tricky rules about who can contribute and when money can be withdrawn make it harder to build a retirement strategy around a Roth. And above all, there s that big up-front tax bill. So who s a Roth really right for? We spoke to experts across the financial-advice spectrum to find out.

A Bigger Umbrella

Roth retirement accounts first hit the scene in the late 1990s. Investors fund traditional plans with pretax income, then pay taxes on withdrawals when they retire; with Roths, investors contributions aren t tax-deductible, but the eventual withdrawals are tax-free. If that makes a Roth sound too good to be true, evidently the IRS thinks so too: There are low limits on Roth contributions currently $5,000 a year for those under age 50, and $6,000 for those 50 and older. And individuals with more than $120,000 in taxable income, or a married couple with more than $177,000, can t contribute at all.

That s part of the appeal of the new rollovers: For the first time, they ll let upper-income savers stash significant assets under the Roth umbrella. In addition to traditional IRAs, investors can also convert SEP-IRAs (for the self-employed) and IRA money they ve previously rolled out of 401(k) plans. (Alas, many investors in 401(k) accounts have to wait until they leave their jobs to roll their money.) Thomas Karsten, senior managing partner at Karsten Tax and Financial Management in Fort Worth, Texas, says some savers are using a back-door strategy, making belated contributions to a traditional IRA for 2009 something taxpayers can do until Apr. 15 then rolling their 2009 IRA contribution into a 2010 Roth. For a small subset of the people who pay the alternative minimum tax, a Roth conversion could offer further appeal, letting them dodge the higher tax rates that come with the AMT and claim more tax deductions. (Figuring out who gets the break is headache-inducing, but most off-the-shelf tax-prep programs can walk consumers through it.)

Whatever happens, any Roth conversion will generate a tax bill. Since most contributions to a traditional IRA have never been taxed, the person doing the rollover has to pay income taxes on the whole amount, at whatever rate he or she would pay on normal income. Someone who rolled over $100,000 could face federal taxes as high as $35,000, plus state taxes. That fact may be enough to discourage many. It s so hard for people, psychologically, to pay tax today when they don t necessarily have to, says Susan Hirshman, managing director at J.P. Morgan Private Wealth Management. People who convert in 2010 have the option to claim the income in the 2011 and 2012 tax years (although by then, of course, taxes may be higher).

Planners are focusing on making sure those tax payments come from the right places. For most people, the worst option is tapping the money they re rolling over; they d face a 10 percent early-withdrawal penalty in addition to the income taxes, wiping out the advantages of the transaction. Generally it s best to use separate savings, rather than borrowing to pay the bill. Hirshman says she s seen parents give adult children cash to help them pay their rollover taxes: The elders can make gifts of up to $13,000 a year per parent without incurring gift taxes.

Betting on the Tax Rates of 2030

The whole point of navigating these arcane rules, obviously, is to pay lower taxes later. But it s hard to know where tax brackets will be 20 years from now. That s why Jor Molchan, a finance executive in Boston, still has doubts about how much to move to a Roth from his regular IRA. I can leave the money as is and avoid taxes for 32 years at least, says Molchan, who s 38. By then, he notes, the tax rules may have shifted.

Some advisers think that s a risk worth taking. Withdrawals from Roth IRAs are tax-free after the investor reaches age 59 . And that stretches the value of the retiree s savings: Bill Urban, of San Francisco wealth management firm Bingham, Osborn & Scarborough, calculates that people with 20 or more years to save money will effectively make almost 10 percent more with a Roth than with a traditional IRA.

Assuming the rules on retirement plans don t undergo a major change, experts say, most people will reach their postcareer years with Roth and non-Roth money. Molchan and his wife, Lorelei, now expect that they ll do just that, converting a small percentage of his assets to a Roth, while keeping a mix of other savings. The Roth IRA is a great tax vehicle, says Mochan. Meanwhile for those who still feel shaky about the call, there s one safety net hidden in the rules. A taxpayer who converts to a Roth in 2010 has until October 2011 to undo it. Alan Haft, a financial planner in Irvine, Calif., says the provision is designed to protect investors who roll over a big chunk of money and then see the market plunge. But in practice, it can help anyone who gets cold feet. Those savers can roll the money back into a traditional IRA, avoid any tax bill and get that very rare thing in personal finance: a do-over.