'Fiscal cliff' bill's effect on 401(k)s The "fiscal cliff" bill will give more workers the chance to convert some or all of their 401(k) account balances into a Roth 401(k), but only if their employer offers a Roth option and allows the conversion. When they leave a job, workers can convert their traditional 401(k) into a Roth individual retirement account, which has similar rules as a Roth 401(k). In 2010, Congress gave employers the option of letting employees convert from a regular 401(k) into a Roth 401(k) while they were still employed - called an in-plan conversion - under very limited circumstances. Who benefitsThe new legislation removes the restrictions on in-plan conversions so employers can offer them to all employees if they so choose. For workers, the Roth conversion only makes sense if you think your tax rate is lower now than it will be when you retire and begin withdrawing money from the account, says Michael Kitces, research director with Pinnacle Advisory Group. The fiscal cliff package extends for one year a law that waives federal income tax on mortgage debt that is forgiven in a loan modification, foreclosure or short sale. Mortgage servicers dealIn other foreclosure news, rumors are flying that federal regulators are close to striking a settlement with 14 mortgage servicers that would replace an independent foreclosure review. Rather than review each case individually, under the rumored settlement the banks would provide $10 billion in mortgage relief, including $3.75 billion in cash payments to people who lost their homes, according to the New York Times. "The review shows it is difficult if not impossible to confirm on a large scale how many borrowers have been hurt by robosigning or other abuses," says Guy Cecala, publisher of Insider Mortgage Finance.