Washington Post columnist Martha M. Hamilton was online Tuesday, May 6 at noon ET to answer questions about financial planning for retirement.

She was joined by Christine S. Fahlund, senior financial planner for T. Rowe Price.

A transcript follows.

To read past Financial Futures columns, click here.

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Martha M. Hamilton: Good day, and welcome to our online chat. I'm happy to have expert advice by my side today. My guest is Christine S. Fahlund, Senior Financial Planner for T.RowePrice. We'll do our best with your questions!

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Woodsboro, Md.: Sunday's column cited the income limits for Roth IRA contributions, but isn't it correct that for the years before 2010, if your modified adjusted gross income is greater than $100,000, you can't convert a traditional IRA to a Roth IRA?

Martha M. Hamilton: I'm glad you asked that. It turns out that I sat bolt upright in bed worrying about the wrong question. I didn't know that there was a separate and different income level for conversions, which is $100,000. So I asked whether the distribution would change my income eligibility for a contribution rather than a conversion. Fortunately, I was still below the $100,000, which I learned yesterday is what I should have been asking about.

Martha M. Hamilton: In other words, if your income is not greater than $100,000, you may convert, and the amount you convert is not counted in determining your eligibility to covert.

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Rockville, Md.: I'm 52 years old and am considering buying my first home because I think this is a great market for me. I'm concerned because I don't want to be saddled with a lot of debt as I move closer to retirement in about 15 years. I want to know if this investment is a possible good idea for me at this age?

Martha M. Hamilton: You could consider a 15-year, fixed-rate mortgage which will give you lower rates than a 30-year. Then you'd have the mortgage tax help during your working years when they would be a greater benefit.

Christine S. Fahlund: I agree with Martha. Be sure you don't become house poor by taking on too much debt. Buy a modest home, with payments you can afford, including taxes and insurance, and with relatively low utility bills and maintenance expenses. This will set you up well for retirement.

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Cincinnati, Ohio: How much should I be paying for a good financial planner? I currently pay $1,400 a year, plus 1% of my portfolio. There are other "fees" on my monthly summary sheets that most of the time I don't understand. I use Ameriprise and really like my adviser but I just don't know if the expense is worth it. Thanks for any advice you can give!!

Martha M. Hamilton: That seems high to me. I think 1 percent of the portfolio is about average, but I'm curious about the additional charges. I would ask my advisor to explain the additional fees.

Christine S. Fahlund: It is difficult to judge fees without knowing exactly what you are receiving in return. However, there are many planners who only charge fees and no commissions that might be less expensive. Do you need to pay to have someone to manage your portfolio for you? If not, there are good retirement date funds on the market today - many being offered by no load fund companies, where the asset allocation decisions and rebalancing are done for you without any additional charge. Something to consider!

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Washington, D.C.: Martha, your article gave me the kick in the pants I needed to "clean up" my retirement accounts. I currently have a traditional IRA ($30K) and a 401K ($100k), but now that I'm primarily a stay-at-home Mom, I'm wondering if I would qualify to roll those accounts into one Roth IRA. I do some occasional freelance work but my husband's and my combined income now qualifies for the Roth--we didn't when I had my "office" job. Thanks, MM

Christine S. Fahlund: You can certainly roll over the assets in your 401(k) accounts into a Rollover IRA and then you can determine whether or not you and your husband qualify to convert your Traditional IRA to a Roth IRA. There are different limits for conversion: $100,000 vs. contributions $159,000 - $169,000 so don't get the two confused. If you are over the $100,000, hang on until 2010 when the limits will go away.

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Oviedo, Fla.: Ms. Fahlund--you're a financial hero. (Alice Rivlin is my other one.) I am a customer of T Rowe and happy to use my hometown company. But I would like tax-managed investments on my taxable accounts and don't see many choices. Are you driving me away to Vanguard? (I have Cap. Appreciation and Personal Strategy Growth right now.) I pay too much in tax and would prefer a lower profile so my reported income is lower. No index fund from you?

Christine S. Fahlund: Well, thanks for the hero part! I am not here to promote T. Rowe Price or our funds. Suffice it to say, that we have many Maryland Tax-free funds and several tax-efficient funds and some index funds. Call the 800 number to find out more.

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Washington, D.C.: Hello, I have about $35k in a 401(k) from a former employer, and $20k in a TIAA-CREF account with my current employer. I just found out that the 401(k) is shifting to a new investment company, so I thought this would be a good time to roll over those funds to my TIAA-CREF account. However, it's also been suggested that I should consider putting at least some of those funds into an IRA. What would your recommendation be--roll it all over to TIAA-CREF, or divert some (or all) into a new IRA?

Christine S. Fahlund: The choice is yours. You can roll into an IRA with TIAA-CREF. You don't have to roll into your TIAA CREF retirement plan. One way to make your decision is to look at it: do I want all my investments to be in annuities or some in mutual funds? Be sure to dig under the hood if you put more with TIAA CREF to be sure you understand exactly what you are purchasing. Rolling to an IRA is a simple process that gives you the opportunity to invest in mutual funds rather than annuities, if that's what you prefer to do.

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Woodberry Forest, Va.: Generally I agree with Mrs. Hamilton's piece on traditional to ROTH IRA conversions. I would like to point out that if a family is applying for need based financial aid for college or Independent School, the conversion could be very detrimental for them. They not only could lose all or most of their need based grant aid but could also lose subsidized Stafford loans and/or Federal Work study.

Christine S. Fahlund: I am glad you raised the issue of financial aid. Generally speaking, everything you do at this point that has a financial impact should be checked out very carefully ahead of time. Look before you leap!

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Alexandria, Va.: Re: The article in Sunday's business section on conversions to Roth IRA: while Martha correctly states that the upper income limits for contributing to a Roth IRA in 2008 are $116,000 single, $169,000 MFJ, the maximum Modified Adjusted Gross Income (MAGI) that one can have when converting a regular IRA to a Roth is $100,000 for 2008 and 2009. (MAGI, however, does not include the amount converted.) That is the limit regardless of filing status (single, MFJ, Head of Household, Qualifying Widow(er)). However, if filing status is Married Filing Separately, one can not covert anything from a regular IRA to a Roth. The article implied that her MAGI was not over $116,000. But just to point out that for everyone, including joint filers, the MAGI must not exceed $100,000.

Martha M. Hamilton: Thanks, Alexandria. We've made that point, but it's worth repeating.

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Washington, D.C.: I understand the advantages of the Roth conversion, but I will only be eligible in the 2010 "Open season." However, I will be 62 by then, and see this option as much better for a younger person with many more years of tax free accumulations. At my age, what should I consider before converting reasonably large traditional IRAs and a TSP?

Christine S. Fahlund: You are correct to consider the choice carefully first. To begin, I would review my investments to see if I have assets in a taxable account I can use to pay taxes instead of dipping into my IRA to pay any taxes due upon conversion. If not, that may be a reason not to convert. Also, if you expect to be in a much lower tax bracket when you retire, you might want to wait and pay your taxes then. Otherwise, if you are unsure what bracket you'll be in, and/or you don't know what new tax laws may be coming, you can plan to convert at least some of your IRAs to a Roth. As Martha said in her column, many retirees simply don't want to pay any taxes once their retired. Period. That could be reason enough to convert in 2010!

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Bowie, Md.: The primary argument in favor of converting tax deferred IRAs into Roth IRAs seems to be that the income tax rates will increase in the future so it is better to pay the taxes now rather than later. But this is by no means obvious. In my opinion the Congress will find more "creative" ways of raising revenue than to increase income tax rates on baby boomer voting retirees. If one were to assume that the tax rates wouldn't increase in the future is there still a compelling reason to convert?

Martha M. Hamilton: No, if you anticipate that you will be paying lower taxes in the future, you would want to wait until your taxes are lower to convert. My decision was based on a belief that tax rates will go up and that I could find myself paying more when I have to start taking funds out of my traditional IRA at age 70.5. I don't underestimate the ability of Congress to avoid unpopular actions, such as raising taxes, but it would take extraordinary creativity to reduce the deficit and take care of other needs.

Christine S. Fahlund: I believe there are other arguments for converting including these two: Pay taxes while I'm still on someone's payroll rather than once I'm retired when I'll be more stressed about paying taxes. Secondly, if I think I'd like to leave the assets to my heirs income tax-free in a Roth IRA or even have my heirs stretch out the tax-free payments from the Roth after I'm gone, then now could be a good time to convert to a Roth if you are eligible.

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Washington, D.C.: Do you think it's advisable to go ahead and convert my traditional IRA ($30K) to a Roth now--while waiting for limits to rise on my 401K in 2010? Also, who is the best person to ask about these types of questions: my brokerage firm (TD Ameritrade) or a hired financial planner or accountant?

Christine S. Fahlund: If you are making more than $100,000 today, you can't convert your IRA OR an IRA rollover from your 401(k) until 2010.

Christine S. Fahlund: You can call one of the highly regarded nationally recognized mutual fund companies and they can provide those answers to you. If you have any doubts whatsoever, confer with a financial planner or an accountant, as you have metioned.

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Alexandria, Va.: I will turn 70 in May with a regular and rollover IRA of approx 400K. My current pension is $18,000 and Social Security $14,000. Any recommendations? Would I not be in a high tax bracket this year if I converted to a Roth IRA?

Christine S. Fahlund: I am not sure I understand your question completely, but I can tell you two things: You will turn 70 1/2 in 2008 which means you will need to withdraw your RMD by April 1 of 2009. So if you want to convert assets in your IRA to a Roth in 2008 you can do so without having to be concerned about RMD rules. If you wait until after April 1, 2009 to convert assets, however, you will need to be very careful with the steps you'll have to take when you convert. So at that point see an adviser!

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Bethesda, Md.: Do you have an opinion on the new managed payout funds which Vanguard is currently launching?

Martha M. Hamilton: I haven't really looked into those yet. I think Fidelity was the first to offer a payout fund, and then Vanguard began offering its version. I've been planning to write a column on the subject which I'll try to get to soon.

Christine S. Fahlund: They are definitely a new type of mutual fund account. If you are retired, and would like to invest in a fund that will distribute money to you annually and still try to conserve your principal if you need it, then one of these funds could be appropriate for you. Be sure you ask lots of questions before purchasing. In particular, have the representative explain carefully how the distributions to you will fluctuate from year to year and whether they will or will not increase to maintain your standard of living in retirement.

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Greenbelt, Md.: What do you mean by "dig under the hood" if you invest with TIAA-CREF? Most of my (admittedly meager) retirement savings is with TIAA-CREF due to current and past jobs in the nonprofit sector.

Christine S. Fahlund: I suggest you call your representative to ask how you can begin taking withdrawals from your TIAA and your CREF accounts. What are your choices? What will they be when you do start taking money out? Once you begin taking withdrawals, can you, or when can you, withdraw extra money if you need it for unexpected expenses? Under what conditions will your monthly payments increase or decrease during your retirement? What guarantees do they provide?

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Mitchellville, Md.: I am puzzled by the comments made in the article that this is a good time to convert from regular IRA to Roth IRA since the stocks are "cheap" by historical standards and hence one would be "saving" in taxes by converting now. This is looking in the rear-view mirror to make a financial decision. If you believe in the efficient market hypothesis the stocks currently are neither cheap nor expensive; they are valued just right. A decision to convert now or two years later has an exactly equal probability of being the right or the wrong decision--unless the taxes increase in the meantime.

Martha M. Hamilton: There are those who believe in the efficient market hypothesis, but experience teaches me that some investments are both undervalued and overvalued from time to time. Remember Enron? However, I was mainly looking forward and anticipating that taxes will be higher in the future. If I'm right, then I will have done better to pay them now.

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Southern, Md.: My husband is 56 and has a 401k. What is the maximum that he can contribute? Thank you!!!

Martha M. Hamilton: The IRS contribution limit for 2008 is $15,500, but because your husband is over 50 he can also do a $5,000 catch-up contribution. But one caution, some employers have lower contribution limits, so he should ask whether his does.

Christine S. Fahlund: Some employer plans now offer the opportunity to contribute to a Roth 401(k) subaccount with after-tax dollars. In addition to the question Martha suggested, he might want to ask if the plan offers a Roth subaccount in his plan, as well. You can contribute to both Traditional 401(k) subaccount and a Roth as long as you don't exceed the combined $20,500 limit Martha listed above (the Roth portion of the $20,500 contribution would be in after-tax dollars and the other portion in pre-tax dollars).

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Rockville, Md.: Don't assume lower taxes in retirement. We paid more last year than when we were employed because we did not have deductions that could meet the standard deduction for 65+. Our income was from investments, taxable Social Security, a small pension, and a conversion of some of our IRA to Roth. I just wish we had started earlier to move funds to Roth.

Christine S. Fahlund: You make a great point here, that if you are eligible to convert to a Roth IRA now, you may want to consider converting a piece of your Rollover IRA or Traditional IRA to a Roth each year. That may mean less of a tax burden each year. Remember, it is best if you pay the taxes from a taxable account, rather than withdrawing them from the IRA first and using that amount after-tax to pay the taxes on the portion you plan to convert.

Martha M. Hamilton: You make a very good point, Rockville. Many people find themselves paying higher taxes in retirement too because of the required minimum distributions that kick in once you're 70.5.

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Rockville, Md.: Can I continue to move some of my IRA to Roth after the required minimum distributions start if the amount is over the RMD amount? For example, $10,000 would be required but then $5,000 extra moved to Roth. Will I be eligible to move funds in 2010 if I am over 70?

Christine S. Fahlund: Yes, you can continue to convert assets from your Rollover or Traditional IRA after your RBD (required beginning date). However, be sure you withdraw the RMD amount for that calendar year and then only convert some or all of the assets remaining after taking the RMD from the IRA account. You cannot convert the RMD amount, also.

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Montgomery County, Md.: How does one juggle competing financial interests and needs? I'm 33, and currently have a decently paying job (for my needs and situation, at least), but was underemployed for quite a while, and also spent a semester and lots of money in grad school. My student loan payment is only $100/month (at 6.8%), I put 7% of my salary into my 401k (my company puts in an additional 15% of my salary). I rent, and I have an old paid-off car. I'd like to move into a nicer apartment, will need to buy a newer car soon, and would really like to be putting away more for retirement. It's very difficult to juggle these needs and wants with every day expenses, and the unexpected expenses (new tires for car, flying to and participating in sibling's wedding, etc). Any suggestion?

Christine S. Fahlund: It sounds like you are on the right track! Bravo for your employer. That's a handsome contribution each year. Let the increases in your own contributions for retirement happen gradually, so you dont' feel them as much or at all. In other words, next year sign up to deduct 8 or 9% of salary to put in the retirement plan. The next year 9% or more, etc. Pay off your student loans as slowly as you can so you can contribute more for retirement. Then that can continue to appreciate for many years to come. When it comes to new cars, buy a new "used" one if you can. You'll be amazed at how much that reduces your cost for the car.

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Arlington, Va.: Straight to the problem: my husband is leaving me and our two young children. In order to keep the roof over our heads, I will be paying out everything that I presently bring in. I need at least $500.00 extra for feeding us and paying for any other necessities. I have no other source of income than that of my job. I know that there are on-line "banks" that lend money to risky borrowers who can not get credit elsewhere. Could you please tell me how to find one? I do intend to pay this all back when I get a higher-paying job. Thank you.

Christine S. Fahlund: Have you considered trying to move to an area with a lower cost of living where you could stretch your income further? Another thought would be to add a part-time job on weekends. There is nothing easy about your current situation, believe me, I understand. However, I really discourage going to an online bank if you can possibly help it. You could be digging a very deep hole for yourself that way that you'll really regret down the road. If it's bad now....

Martha M. Hamilton: If you keep the house and take over the mortgage as part of the settlement, you might be able to get a home equity line of credit or loan which would help reduce your taxes. Otherwise, considering moving to more affordable housing is worth a shot. I have been in a similar situation, and one thing I did was to eliminate unnecessary expenses (cable) and check to see if I could find lower-cost providers of services such as long distance, home owners, car insurance. I also looked around for assets I could sell, including clothes that I took to a consignment shop. When things are that tight, every little bit helps. The good news is that it eases up eventually. Good luck to you.

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Rockville, Md.: Can a stock be transferred (converted) from an IRA to a Roth or does the conversion have to be in cash? The IRS regs aren't clear. Can people already taking the required distribution also continue to convert some of their IRAs to Roth? Married couples are better off reducing their IRA accounts before one of them passes and the tax exemptions are fewer.

Christine S. Fahlund: The institution handling the conversion for you will sell the stock in the IRA at the time of conversion and then upon your instructions immediately repurchase it in your Roth IRA. There will not be a taxable event assuming you don't withdraw any of the assets from the IRA during the process. However, there may be commissions. Ask for all the details before you leap. Yes, once you start taking RMDs you can still continue to convert the assets remaining in the IRA to a Roth. However, you must be sure to take RMD for that tax year first. Then convert some or all of the rest.

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Baltimore, Md.: My modified AGI is at the upper limits for a contribution to my Roth IRA now. My question is, am I better off over-contributing and then re-characterizing to my regular IRA when I do my taxes, or should I guesstimate my contribution to Roth? Changes in bank interest rates will probably have a downward pull on my AGI this year.

Christine S. Fahlund: What about waiting to contribute until you do your taxes -- after the end of the calendar year and before April 15, 2009? You can always save the amount of the contributions in a money market account during 2008 and then make the after-tax contribution to a Roth or the pre-tax contribution to a Traditional IRA in the Spring, when you have all the answers?

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Ellicott City, Md.: I plan to be a financial planner after I retire in 2 years and would either have my own financial planning firm or work for a company like T. Rowe Price. Is there any advantage to getting the certification (CFP) now or should I just wait until I retire?

Thank you.

Christine S. Fahlund: That's entirely up to you. If you are eager to get started, go for it now! The sooner you start, the sooner you'll be finished. It is a very challenging set of courses and exams, so it is up to you and what your current work schedule is like and/or your family obligations.

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Vienna, Va.: Am I the only one who is skeptical of Roth IRA conversions? Isn't it better to avoid paying taxes for as long as possible, particularly when during my peak earning years?

Martha M. Hamilton: If you think your taxes will be lower in the future, you probably don't want to convert. As you'll see from a previous comment to the chat, taxes don't always go down in retirement, and then there are those who think tax rates will have to go up to address the budget deficit and other national needs.

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Arlington Va.: Funding a Roth IRA sounds good to me. However, don't we have to wait until we are 70 years old to access those funds? Thank you.

Martha M. Hamilton: No, you can access the funds at age 59.5 without penalties if the money has been in the account at least five years.

Christine S. Fahlund: I think you may be confusing the process of funding a Roth IRA with the timing of RMD required distributions from Traditional and Rollover IRAs. That date is by April 1 of the year following the year in which you turn age 70 1/2. Fortunately, Roth IRAs you own do not require you to withdraw RMDs at any age (unless you are the beneficiary of a Roth in certain circumstances). Generally speaking, if you do contribute to a Roth IRA now, try not to tap into it for as long as possible. We encourage investors to "save the best for last". Why do we say this? Once you are retired, it will make you feel good to see that nest egg growing and know that all of the assets in the account are tax-free to you when you withdraw them (a few exceptions may apply).

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Martha M. Hamilton: Thanks all for a large number of good questions, not all of which we were able to get to today. And many thanks to Christine Fahlund for contributing her substantial knowledge to the chat. Join me again May 20, and we'll talk some more.

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