JANE BRYANT QUINN

Every year, the government seems to offer more tax incentives to save and invest. And this year, you might even have some extra money to do it with.

Tax refunds are unexpectedly high, thanks to the new tax credits and deductions for 1998. So far, they're averaging $1,729 up 15.5 percent from last year at this time. You might roll that check right into a retirement account.

Here's what's new on your '98 returns:

? The Roth Individual Retirement Account. You fund Roth IRAs with after-tax money. If you meet all the rules, the gains on this money will pass entirely tax-free.

From a tax-preparation point of view, Roths can be a blessing or a pain, depending on whether you've started one from scratch or converted an old, traditional IRA into a Roth.

(1) A new Roth: This lovely thing doesn't even have to be reported on your income-tax return. You can fund a 1998 Roth with as much as $2,000, right up to the due date of your return (plus any extensions you file for).

There are income limits. You get the full contribution if you're married, with an adjusted gross income up to $150,000; or single, up to $95,000. The contribution phases out at $160,000 for couples and $110,000 for singles.

If your child has earnings but can't afford a Roth, consider funding one for him or her. You simply open the Roth and make the deposit in the child's name.

(2) Converting a traditional IRA into a Roth: You're eligible if your income doesn't exceed $100,000, married or single. But there are tax consequences that you might not have thought of.

Your traditional IRA becomes taxable income when converted to a Roth. If you converted last year, you can spread that income over four years, to reduce the annual tax bite. So 25 percent of the income is taxable on your '98 return.

Before converting, you probably checked to see if the tax-exempt gain was worth its upfront cost. Often, it is.

But did your analysis cover what four years of added income would do to the size of your child credit, education credit, personal exemptions, itemized deductions, medical deductions or the amount of your Social Security payments subject to tax?

If you now discover that the tax hit isn't worth it, you can switch your Roth back into a traditional IRA any time between now and the due date of your return, including filing extensions. No penalty will be assessed.

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