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Retirement experts seeking to wring some benefits out of the new tax law have turned in part to a perennial fail-safe: the Roth IRA.

The Roth has been a popular tool for a variety of goals ever since its creation in 1997. Unlike typical IRAs, the Roth requires that investors contribute money


it has been taxed. Once the Roth has been open for five years, all distributions are completely free of tax, provided certain conditions are met (you're 59-and-a-half years old, disabled or dead). You're also able to withdraw up to $10,000 in gains if the proceeds are used to purchase a home. (Since your contributions have already been taxed, they can always be withdrawn tax-free.)

Many of the perks in the new law could persuade investors to put less in their retirement accounts. To reap any benefit from the low 15% rate on capital gains and dividends, for instance, those stocks and funds need to be held in taxable accounts. (In tax-advantaged accounts such as traditional IRAs and 401(k) plans, gains and dividends aren't taxed at all until the investor takes a distribution, at which point the entire distribution is taxed at ordinary income tax rates. For reasons why these accounts still offer the most bang for your buck, see

Tax Law Shouldn't Alter Your Behavior.)

But the new law also broadens the 10% tax bracket -- in 2003 and 2004 the bracket ends with taxable income of $14,000 for joint filers, and at $7,000 for single filers. (In 2005 it goes back down to $12,000 and $6,000; the 10% tax bracket disappears entirely in 2011.) And that's good news for investors who are interested in converting their existing IRAs to a Roth IRA. Since the money that's converted is taxed as ordinary income, the lower rates enable investors to convert more money at the lower income tax rates. That provides many people -- retirees in particular, who are often in the lower tax brackets -- with a good opportunity to convert existing IRAs to Roths far more cheaply than previously possible. (For more on Roth conversions, click

here and

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Whether married or single, taxpayers can't have more than $100,000 in adjusted gross income if they want to convert. But if you're well below that mark (as many retirees are), you may want to use up your 15% tax bracket each year, and maybe even your 25% tax bracket, by converting enough money to reach the bracket's limits. You can convert enough IRA money each year to use up these low tax brackets. (The 15% bracket ends at $56,800 in taxable income for married couples, and at $28,400 for singles.)

By converting even just a portion of an IRA, investors can take advantage of the lower income tax rates (before they disappear in 2011) and shelter money tax-free in a Roth IRA indefinitely.

For those of you unable or unwilling to convert to a Roth, consider this option: Withdraw money that you don't need from your retirement account. That sounds counterintuitive -- typically planners advise clients to leave money in tax-advantaged accounts for as long as possible. But many people over 59 and a half are loath to withdraw money from their retirement accounts for such "frivolous" expenses as a family vacation or a new car, even if they can afford the luxury. But withdrawing now could mean paying less tax than waiting a few years.

"A lot of our clients have retirement accounts so big that by the time they're forced to take the required minimum distribution at age 70 and a half, the minimum distribution puts them in the third or fourth tax bracket," says Kathy Stepp, a CPA and financial planner in Overland Park, Kan. "But if you're in a lower bracket now, start taking some withdrawal to fill out the 15% or even 25% brackets. You'll pay less tax now than you will later on."

Now, no one would advise you to raid your rollover IRA to finance a little fun in the sun. But if you're in a lower tax bracket


are certain you won't be endangering your retirement (and, of course, are older than 59 and a half, before which age you'll pay a 10% penalty for distributions), then this year or next might be a good time to draw down some funds to take advantage of the lower and wider brackets.