New to the forums, but I believe I have an idea:

First off, assuming from the idea about the mutual to ROTH conversion, I take it your money doesn't need to be that accessible for emergencies.

I would say
A) Transfer the mutual into a good looking Equity Indexed Annuity if you're looking for stability. and open a ROTH based on salary. Annuities are tax sheltered and you won't get the early tax hit. Equity Indexed Annuities take away all the scary losses from a mutual fund, but pay you the gains, the problem is they're only rated on a monthly, quarterly, or yearly basis depending on the product, and almost all of them have caps (some don't right now though!) this will take away some risk from that mutual if that's what you're worrying about, and will prolly make your money work hardest, while still taking away a bunch of risk if that's what you're worried about.

B) Keep the Mutual if it's doing well, and do a ROTH based on salary. A ROTH IRA dump usually isn't useful unless you're looking for an emergency payin. But once again, that depends on your age, income, and expenses, plus your personal plan for retirement.

im having the same problem

1) This makes no sense, you can't convert non-qualified assets to a Roth IRA. You can sell you mutual funds and then contribute your annual $5k to the Roth of course. You will pay capital gains taxes, or incur a loss.

The position of your capital assets as well as your ability to fund your employer plan through your salary will be most important in deciding which way to go.

The Roth IRA is one of a number of accounts allowed under the tax law of the United States that allows a tax reduction on a limited amount of saving for retirement. The account is named for its chief legislative sponsor, the late Senator William Roth of Delaware. A Roth IRA is an IRA that, except as explained below, is subject to the rules that apply to a traditional IRA. You cannot deduct contributions to a Roth IRA.If you satisfy the requirements, qualified distributions are tax-free.You can make contributions to your Roth IRA after you reach age 70 ½. You can leave amounts in your Roth IRA as long as you live.The account or annuity must be designated as a Roth IRA when it is set up.

If you convert your Traditional IRA to a Roth IRA you will be liable for paying ordinary income tax on the entire balance of your Traditional IRA as it's tax-deferred. If you don't have that cash laying around to pay the taxes and must use funds from your Traditional IRA you will be dinged a 10% "early withdrawal penalty" on the distribution in addition to ordinary income tax. In short, if you have the money to pay the taxes I feel the conversion makes sense, but if not, I'd consider keeping the traditional IRA and start a new Roth IRA, assuming you meet the income limits.

I am assuming you meant to ask, which method will result in better returns after taxes? To that end, you will want to consult a tax advisor but remember that the idea of the Roth IRA is that one believes taxes will be higher in the future than they are today. If you believe that notion, the Roth IRA is very valuable and an important part of your retirement strategy.

The maximum combined contribution for a Traditional and Roth IRA is $5,000 or $6,000 if over 50.5.