Many baby boomers are aware of tax law changes for Roth IRA conversions, but few plan to convert, believing that income tax rates will be lower in retirement, a new survey finds.

The survey commissioned by the USAA, San Antonio, Tex., highlights changes in investor awareness of the Roth IRA conversion provisions available this year, compared to USAA’s 2009 survey on the topic.

Of the boomers surveyed who own an IRA and can now convert to a Roth IRA due to the new income limits, the research found that:

–58% are aware of the changes, up 19 points over the 39% of respondents who were aware of the rules in 2009.

–70% do not plan to convert in 2010, and 17% are unsure. In 2009, 67% did not plan to convert this year and 24% were unsure.

Of all respondents who own an IRA, 72% are not planning to convert some or all of their traditional IRA to a Roth IRA this year and 18% are unsure. This closely aligns with the 2009 findings, where 73% of all respondents who owned an IRA did not plan to convert in 2010, and 19% were unsure.

When survey participants were asked why they wouldn’t convert, the top 3 choices were:

–44% believe their income tax rates will be lower in retirement, and they do not want to pay higher taxes by converting funds now;

–35% received a recommendation from a tax advisor or financial planner to not convert;

–27% are not able to pay the taxes that would be due on the converted funds.

When asked what would help survey respondents reconsider their decision to not convert, the top two choices were:

–Having more information about the benefits of a Roth IRA (48%);

–Having a better understanding of how the conversion process works (46%).

Among respondents, 39% said that having the funds handy to pay the bill would help make the conversion decision easier.

“It’s a positive sign that some people are consulting financial advisors to determine if a Roth IRA conversion makes sense, but we are surprised by how many investors are gambling on future income-tax rates to make this decision,” said Ken Kilday, a wealth manager with USAA Wealth Management. “The combination of today’s historically low income-tax rates and the flexibility to pay taxes on the converted funds in 2010–or to split it between 2011 and 2012–should encourage more investors to work with a financial expert to explore whether making a full or partial conversion this year will help them meet their long-term financial goals.”