• Decide whether you should contribute to a traditional deductible, traditional nondeductible, or Roth IRA. While you have until April 15, 2011, to make contributions for 2010, take a look at your income now to determine which types you are eligible to contribute. There are different eligibility rules for traditional deductible and Roth IRAs, although all taxpayers can contribute to a traditional nondeductible IRA. Decide at your leisure, so you don't have to scramble as April 15 approaches. In 2010, you can contribute a maximum of $5,000, plus you can make an additional $1,000 catch-up contribution if you are over age 50.

• Consider converting from a traditional to a Roth IRA. Amounts converted must be included in income if taxable when withdrawn (i.e., contributions and earnings in deductible IRAs and earnings in nondeductible IRAs) but are exempt from the 10% early withdrawal penalty. Starting in 2010, all taxpayers can convert, regardless of income. If you make a conversion in 2010, the tax can be paid in two installments in 2011 and 2012 with no tax due in 2010.

• Make sure to withdraw Required Minimum Distributions (RMD) before year-end to avoid penalties. You must take your first RMD by April 1 of the year after you turn 70½. If you wait until April 1 of the year after you turn 70½ (rather than taking your first RMD that same year), you'll have to take another RMD by December 31 of that same year. After that, you'll be required to take your RMDs by December 31 of each following year. If you don't take your RMD by year-end, you are subject to a penalty tax equal to 50% of the excess of the amount that should have been withdrawn over the amount that was actually withdrawn. RMDs are not required from Roth IRAs. To calculate your RMD, your total account balance as of the preceding year is divided by your life expectancy. While RMDs were not required in 2009, they are required in 2010.

• Beneficiaries of inherited IRAs should review those IRAs. When there are multiple beneficiaries, it is typically best to split the IRA into separate accounts by December 31 of the year following the original owner's death. If the account is not split, distributions must be taken by all beneficiaries over the life expectancy of the oldest beneficiary. By splitting the IRA into separate accounts, each beneficiary can take distributions over his/her life expectancy. This is especially important for a surviving spouse, who can only roll over the IRA to his/her own account if he/she is the sole beneficiary.