BOSTON ( TheStreet) -- Americans are pouring money into Roth IRAs from traditional individual retirement accounts after the government lifted the income limit this year.For discount broker Charles Schwab ( SCHW), Roth IRA conversions were more than three times higher in the first two months of 2010 than in the same period last year, and the amount of assets exchanged was 14 times higher. At fund-management firm Fidelity Investments, there were about 19,000 conversions in January, four times that of the same month in 2009. Traffic to conversion-related content on Fidelity.com was up sevenfold. The government waived the $100,000 adjusted gross income cap for conversions to Roth IRAs on Jan. 1. Roth IRAs differ from traditional IRAs in that they don't offer a tax deduction for making a contribution, but the balance grows without taxes, and there's no levy on withdrawals made in retirement. Those converting in 2010 have the added option of reporting one-half of taxable income in 2011 and the other half in 2012. "We expect a spike in March and April as people speak with their advisers during tax season, and then another big spike in December as people are doing end-of-year tax planning," says Petra Campos, Schwab's director of retirement products. According to a Fidelity survey, 40% of investors working with tax advisers are eligible to take advantage of the recent removal of income limits for Roth IRA conversions, up from 13% last year. Nearly half (44%) of the conversions are $50,000 or more. More than a third (35%) of those clients are expected to complete a conversion by the end of the year. The survey of about 500 tax advisers found that they believe 43% of their clients would benefit from a Roth IRA conversion. A total of 54% of investors proceeding with a conversion will take advantage of the one-time opportunity to split taxable income between 2011 and 2012. The rest will report the full amount on their 2010 tax return. Investors ought to evaluate partial conversions over several years, says Chris McDermott, senior vice president of investor education, retirement and financial planning at Fidelity. Expectations for government-set tax rates as well as individuals' tax brackets are key factors, according to McDermott.
-- Reported by Joe Mont in Boston.