Let me outline the fact situation.

Client age 62. Wife age 59 NO children

Client has NW of $5M

Will continue to work for 5-7 years

Estimated income over next 5 years $500K (MAXIMUM TAX BRACKET.)

Has $300K in IRA and has basis of $50K

Living expenses $100K Excluding Fed and state taxes

Has Roth IRA and Profit Sharing plan in Sub-S corp. and maximizes contributions each year

Assumptions

1. Tax rates to rise for high income individuals

2. Stock market will recover (over time) and will return 8-10%

3. Client will make non-deductible contributions to IRA’s each year

4. Client has enough income at retirement currently and could easily wait before withdrawing $$$ from ROTH

5. Tax rate in retirement will be in top bracket

6. Client has other “outside funds” to pay tax on Roth conversion

7. Client charitable inclined and not really concerned about passing on Roth dollars to anyone other than wife (remainder men not a big consideration.

Now the questions:

Client plans on making full Roth Conversion in February (UNLESS YOU have other thoughts) and paying the tax due by increasing quarterly payments. Assuming stock market will increase throughout the year it is better to make contribution in Ferbuary (the earlier the better because in theory less growth in the account than later on in the year. DOES THIS MAKE SENSE? Also if the market goes down he has until Oct. 15, 2010 to un-convert.
Clients thinks is he will always be in a high tax bracket (even during retirement) and that it is better to pay the tax now and have a source of “tax free” withdrawals later on which will allow him to determine how much taxable income he must report each year by increasing withdrawals from the Roth.

If you assume that tax rates increase in 2011 it is better to make all the tax payments in 2010 vs. spreading them out over the 2 years. The time value of money is not that important considering the low rate of return on money market funds. DOES THIS MAKE SENSE?
Client has a Roth 401-k. Is it possible to transfer the basis (the value on the clients 8606 form) to his Roth in the profit sharing plan?
First of all is it possible and if possible does it make any sense to do so?

If client does full conversion in 2010 does it make sense to go ahead and contribute to his non-deductible IRA BEFORE conversion?

Your thoughts on these questions would be appreciated.