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The option for more people, regardless of income, to convert traditional IRA money into a Roth IRA has received a lot of attention this year.

Now, thanks to the Small Business Jobs and Credit Act of 2010 that was signed into law on Sept. 27, the same opportunity exists for workplace retirement plans.

First a quick IRA refresher. With a traditional IRA, the account grows tax-deferred, meaning that when you withdraw the money, you'll owe taxes at your ordinary income tax rate. Some traditional IRA owners also might be able to deduct their contributions on their tax returns.

A Roth IRA, on the other hand, is never tax deductible. But when you withdraw Roth money in retirement, you won't owe any taxes.

Many workplaces have similar choices in their defined contribution plans, typically known in the private sector as 401(k) plans, or 403(b) plans for nonprofits and 457(b) plans for government offices.

These workplace plans -- and for ease of reading (and typing!), I'm just going to call them 401(k)s -- are taken out of your paycheck before payroll taxes are calculated and taxes aren't collected as your account grows. But when you take 401(k) distributions, you have to pay taxes on that money.

Some companies also offer Roth 401(k) plans, in which your already-taxed contribution amount is put into the workplace plan and you later withdraw it without owing any tax.

Now, the new small business law allows workers to convert their 401(k) plans to Roth 401(k)s. But there are some limits.

Workers can convert their 401(k)s into Roth 401(k)s if they are age 59 ½ or they have participated in the plan for at least five years or the money has been in the workplace plan for at least two years.

Also, regular 401(k) money can only be rolled over into a Roth 401(k) which is available to all employees, both those opening accounts as well as rolling over regular contributions. That means your employer cannot set up a Roth 401(k) option just for folks who want to roll over their traditional 401(k) funds to an eventually tax-free account.

And remember that if you do choose to rollover 401(k) funds to a Roth 401(k), you'll owe tax on converted money that previously was untaxed.

However, the new small business law allows workplace plan rollovers the same option that is available to folks who this year convert a traditional IRA to a Roth IRA. In both conversion instances, either of IRAs or Roth accounts, you can choose to pay any due taxes in the 2011 and 2012 tax years.

If you have a regular 401(k) and are interested in rolling the money into a Roth 401(k), talk to your employer's benefits manager and to your retirement adviser. Depending on your individual situation and your current and future tax bracket, the move could reduce your future tax liability.

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