Converting a traditional IRA to a Roth IRA makes sense if you believe you will be in the same or higher tax bracket when you retire. Considering the current budget deficit and the Bush tax cuts expiring in 2011, we all might see higher tax rates in the future.

There are restrictions in place that bars anyone making over $100,000 per year from converting to a Roth IRA but those restrictions will be history starting in January 2010.

When you convert to a Roth IRA you won’t pay a penalty but you will have to pay taxes (at your current tax rate). Ah, but when you retire, any money you withdraw from a Roth IRA is tax-free because you already paid taxes on the money deposited.

Other benefits of a Roth IRA over a traditional IRA include the fact that you don’t have to start making mandatory withdrawals after age 70¹⁄². Money withdrawn from a Roth IRA doesn’t count towards determining if any of your Social Security benefits are taxable.

After four straight quarters of declines in Gross Domestic Product (GDP) the U.S. economy expanded by a healthy 3.5 percent in the third quarter of 2009 according to The Bureau of Economic Analysis.

The recession which started in the fourth quarter of 2008 is over, but will officially be over when we have back to back quarters of positive GDP growth.

Adding to positive growth in the third quarter was personal consumption, exports and federal government stimulus spending. Automobile output had a significant contribution to GPD in the third quarter, adding 1.66 percentage points to the third-quarter change in real GDP. The Cash for Clunkers program increased motor vehicle purchases in the quarter and is the main reason for the increase.

Subtracting from growth in the third quarter was an upturn in imports, a downturn in state and local government spending, and a deceleration in federal government spending.

The National Association of Realtors (NAR) reported existing home sales shot up 9.4 percent to a seasonally adjusted annual rate of 5.57 million in September, up from a level of 5.10 million in August.

Sales activity is the highest it has been since July 2007.  Existing home sales include single-family, town homes, condominiums and co-ops.

Low mortgage rates and the $8,000 first time home buyer tax credit are driving existing home sales higher. The tax credit ends November 30, 2009 unless Congress extends the credit. The NAR is lobbying Congress hard to extend the tax credit. The NAR also has a “Call for Action” page that real estate agents can use to email their senator and congressperson to urge them to extend the tax credit.

Another positive sign in the report is that the supply of homes for sale at the end of September fell 7.5 percent to 3.63 million. This represents a 7.8 month supply at the current sales pace, down from an 9.3-month supply in August. Unsold home inventory totals are 15.0 percent below a year ago. When the supply of homes comes down to a more historical norm, housing prices will stabilize.

Lawrence Yun, NAR chief economist said, “The current housing supply is the lowest we’ve seen in two and a half years. If we could continue to absorb inventory at this pace, home prices would return to normal, modest appreciation patterns next year.”

On the negative side, the national median existing-home price for all housing types was $174,900 in September, which is 8.5 percent lower than September 2008. Foreclosures and short sales continue to drive the median home price down.

Wells Fargo just released some new details about their Way2Save account. The Way2Save account was started by Wachovia Bank and has been continued by Wells Fargo after they acquired Wachovia.

First some details on the Way2Save account. The account is a savings account that is linked to your checking account. Every time you make a transaction from your checking account, $1.00 is deposited into your Way2Save savings account. Transactions eligible include using your Wachovia Check Card to make a purchase, automatic payments and paying a bill online. You also receive a higher yield on the savings account and a one-time anniversary bonus. Way2Save Account Application

The new details on the account include offering the account in Washington and Minnesota. The account will also be available in the State of Colorado in November.

On the Wells Fargo - Wachovia Blog, Matt Wadley had the following comments about the Way2Save account.

With the new and improved version of Way2Save, you’ll notice more automatic savings options including monthly and daily automatic transfers and the Save As You Go^SM option! It transfers $1 from your checking account to your Way2Save account for each Check Card purchase (signature or PIN), online bill payment or automatic payment (ACH) you make. You’ll also notice there’s no longer a limit on the monthly automatic transfers made to your Way2Save account.

We also heard you loud and clear when you said you wanted to be able to make deposits into your Way2Save account whenever you wanted. Well, we’re making that happen! Our new Way2Save account allows you to make deposits into your account in a store, at the ATM, or through an online banking transfer. Now, when you have money left over from that vacation or you receive money back at tax time, you can put it right into your Way2Save account!

The Federal Deposit Insurance Corporation (FDIC), which insures bank deposits since 1933, including certificate of deposit accounts and savings accounts will be broke by this week if additional funds are not provided.

The insurance fund that has been depleted by 95 bank failures this year will be replenished by insured institutions by having them prepay their estimated “quarterly risk-based assessments” for the fourth quarter of 2009 and for all of 2010, 2011 and 2012. In short, banks are prepaying their insurance fees until the end of 2012.

The FDIC estimates that the total prepaid assessments collected would be approximately $45 billion which will be enough to replenish the insurance fund.

How about future bank failures? If the FDIC collects the next three year’s of assessments now what will it do for money in the future? The economy is turning around this quarter but there are dozens of banks that are still in dire straits, see the Texas Ratio Bank List. If the economy turns sour again or GDP growth is slower than expected, the list will grow - will $45 billion be enough?

The FDIC Board also voted for a three-basis point increase in assessment rates that will take effect on January 1, 2011 for seven to eight years. The special assessment will help the fund.

The FDIC also has the ability to borrow $100 billion from the Treasury right away and up to $500 billion with the Treasury Secretary and the Federal Reserve’s approval.