Beginning in 2010, taxpayers who were previously barred from converting traditional IRA's to Roth IRA's will be permitted to do so. Who are these guys? Maybe you. Taxpayers with overall incomes (AGI) in excess of $100,000.00 (approximate) will now qualify and a conversion could end up being a great deal for some people, particularly those who have made non-deductible IRA contributions over the years.
Put simply, when you convert a traditional IRA you're taxed on the current value of your IRA. Conversions of non-deductible IRA's are only taxed on the value that exceeds the original contributions, not on the entire value. After conversion, the Roth IRA earnings and withdrawals are tax free (certain conditions apply). Forever.
The trick is figuring out if you'll be money ahead to pay the tax now. It is almost a no-brainer for young people. Old Guys? Trickier. One thing is certain, in this down market, the tax bite will likely be less.
Nice little bone from the tax boys: Take up to three years to pay the tax.
Tax Tip: If your business is losing money or you have been unemployed this may be a perfect time to convert because the tax you pay at conversion is calculated according to your current tax bracket. The lower your income, the lower your tax.
Good overview here.