The Roth IRA is an alternative form of IRA which, if structured properly, allows for tax-free retirement income. The corollary, of course, is that contributions to a Roth IRA are not deductible, but the growth in the Roth IRA after the contribution to the Roth IRA is not subject to any federal income tax at all.
Before 2010, those with modified adjusted gross income of less than $100,000 could convert a traditional IRA into a Roth IRA, with the traditional IRA owner paying income tax on the amount in the converted IRA. This income restriction has now been lifted, and anyone can convert a traditional IRA into a Roth IRA. In addition, for conversions occurring during 2010, the income from the conversion is not reported in the year 2010; instead, half the income is reported in 2011 and the other half in 2012. Alternatively, the account owner can elect to pay the tax in 2010.
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