I opened a Roth in early '98, subsequently my income increased, based on one time occurrences, so that it is now beyond the permissible limits. Must I reverse the Roth now into a regular IRA or can I keep the Roth and simply pay a tax?

You opened your Roth in 1998. You only have a problem if your income last year (1998) increased above the threshold amount. If this is your situation, then you must see your custodian ASAP (before you file your 98 tax return) to switch the Roth back to regular IRA $$. This reverted IRA may be able to be converted this year to a Roth if you meet the separate income limit for Roth conversions in 1999. You must reverse, there is no option to pay a tax a keep the Roth.

If your income increased this year, it does not effect actions taken in 1998.