Planning for 2010 and Roth IRA Conversions

[TheMetetron]

I was hoping to get some dialog going on this before I go to a tax adviser to hammer out the details. Also, the nature of poker professionals with SEP-IRAs add in some complicating factors.

As many of you already know, in 2010 the conversion rules will be changing for Roth IRAs. Prior to 2010, if you made over $100k in a year, you couldn't convert traditional IRAs (which I believe include SEP-IRAs) to Roth IRAs; if you made less you could.

In 2010, the income limit to be eligible for conversions will disappear completely, meaning that anyone can convert their traditional IRAs to Roths. This has a lot of high-income people excited at the possibility of locking away money tax-free and without minimum required distributions. Roth money (nominal amount invested) can also be withdrawn any time without penalty, except the obvious loss of compounding; this gives some wiggle room in emergencies.

So my question is, how does this affect poker players such as myself who are normally locked out of contributing to Roth IRAs? Is it wise to start maxing out traditional + SEP IRAs with the plan to convert the whole thing in 2010 (and with taxes on that being half deferred to 2011 and half to 2012!).

There are complicated rules if you don't convert your entire traditional IRA that may mess up it being a smart move for some people, possibly including those with SEP IRAs.

I also can't seem to find the contribution limits to non-deductible traditional IRAs? Anyone?

FWIW, by 2010 I'll have over $200,000 in my SEP-IRA plus whatever the maximum traditional IRA contributions would be. Would it be wise to follow this plan and convert the whole thing in 2010? What do I do after 2010? Keep converting the ~$45k I can put in my SEP-IRA every year along with the traditional money? I assume at some point congress is going to close this loophole.

Also, there is the possibility that someday Roth withdraws will be taxed... would converting everything be a horrible idea in case that happened? But only converting say half would have screwed up tax implications that make the deal pretty sour.

Thanks for any input you guys have on the subject as all I've done so far is read a few articles and I'm sure some of you know even more than I do. For those that had no idea about this, perhaps it will help you out.