Beginning Jan. 1, some of the rules on the Roth IRA will change — and one of those changes in particular is probably to your advantage.

Let’s review a couple of the relevant 2009 rules:

• You can’t contribute to a Roth IRA if you’re an individual with a modified adjusted gross income of at least $120,000, a married couple with a modified AGI of at least $176,000, or a limit of $100,000 each if a married couple files separate returns.,
• Individuals with modified AGI of more than $100,000 cannot transfer money from a traditional IRAs to a Roth IRA, nor can married couples who each have a modified AGI of $100,000 and file returns separately.

If you’re in the above-$120k category as a single or above $176k combined as a married couple, you still won’t be able to contribute a Roth in 2010. But starting Jan. 1, the IRS will eliminate  the income-limit restrictions on transferring money — or “converting” — from your  traditional IRA to a Roth, where the money can grow tax-free.

And here’s the kicker: That means, besides being able transfer money to a Roth, you’ll also be able to continue contributing to a traditional IRA (which has no income limits) and and then convert that money to a Roth IRA — in effect, making a contribution to the Roth.

Why not?
OK, your next question may be, “Why should I bother?” The answer is to consider the tax advantages:

• Generally, withdrawals from a Roth are tax-free and penalty-free as long as the converted money stays in the account for at least five years or until you reach age 59½. Note: Every time you convert money, those assets have their own five-year timetable.
• With a traditional IRA, you have to start taking money out — and paying taxes on the withdrawals — after age 70½. With a Roth you can let the money sit, and presumably grow, for as long as you want.
• As an estate-planning tool,  Roths have another advantage. Those who inherit a Roth will have to make planned withdrawals based on life expectancy, but there won’t be any income tax on the money.

Now, the downside (but even that comes with a cushion). When you convert money from your traditional IRA, you’ll have to pay the income tax. But in 2010, you can report the entire amount on your 2010 tax return or you can spread it across your 2011 and 2012 returns.

For more, take a look at Vanguard’s research on the topic.