For those of you who have traditional IRAs or 401Ks, the recent sharp decline in stock prices can be a tax boon if you convert the IRA or 401K to a Roth IRA. You will need to pay taxes on the conversion but the tax is based on the value of the account at the time of the conversion.
As an example, let’s say you put $5000 into an IRA stock mutual fund in 2007. Let’s say the account value is $3000 now. If you convert the account to a Roth IRA, you pay taxes only on the $3000 value. All future gains are tax-free. There are no required minimum distributions. Plus there are additional benefits for your heirs.
But wait, there’s more! If you convert in 2010 (that year only), you can pay the taxes on the conversion over two years.
Also, the $100,000 income limit for Roth conversions expires in 2010.
Innocent Investor 
Please note that if you are on Medicare and are converting a traditional IRA to a Roth IRA and you go over certain income limits including tax exempt imcome your Medicare premium will go up in 2 years. Example convert in 2009 and go over the income limits Medicare premiums will go up in 2011.
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