The Roth conversion ladder, explained

Last reviewed July 2026 · 5 min read

A Roth conversion moves money from a pre-tax account (traditional IRA or 401(k)) into a Roth IRA. You pay ordinary income tax on the amount converted this year; in exchange, that money grows tax-free and — unlike pre-tax money — is never subject to required minimum distributions during your lifetime. A Roth conversion ladder is simply a series of these conversions, one per year, planned so the tax cost of each rung stays low.

The 5-year seasoning rule

Roth IRAs actually have two different 5-year rules. The one that matters for a ladder applies to conversions: each conversion starts its own 5-year clock on January 1 of the year you convert. Once a conversion has “seasoned” for five years (or once you reach age 59½), you can withdraw that converted principal without the 10% early-withdrawal penalty. Withdraw it sooner and the penalty generally applies, even though the conversion itself was already taxed.

That is what makes the ladder useful for people who retire well before 59½: convert an amount in year one, again in year two, and so on. Starting in year six, the year-one rung becomes penalty-free spending money, then the year-two rung the year after that. You need roughly five years of expenses from other sources — taxable brokerage, cash, or old Roth contributions (which are always withdrawable) — to bridge the gap while the first rungs season.

Gap years: the cheap window

The best conversion years are usually the “gap years” between your last paycheck and the start of Social Security and required minimum distributions. With little or no other ordinary income, the standard deduction and the low brackets sit empty — and conversions can fill them at 10% or 12% instead of the 22%+ you may have deferred at while working.

Fill the bracket, not a round number

A common way to size each rung is “fill the bracket”: convert exactly enough to bring taxable income up to the top of a chosen bracket. For 2026, a married couple filing jointly with no other income could convert about $133,000 and still stay inside the 12% bracket — the $32,200 standard deduction absorbs the first slice, and the 12% bracket runs to $100,800 of taxable income. The 22% bracket extends to $211,400 and the 24% bracket to $403,550 (all 2026 figures, indexed annually).

Two cautions. Conversion income raises your MAGI, which can cost ACA premium subsidies before 65 and trigger Medicare IRMAA surcharges later (IRMAA looks back two years). And conversions work best when the tax is paid from a taxable account, so the full converted amount lands in the Roth.

Why RMDs make this urgent

Left alone, a large pre-tax balance eventually becomes forced income: required minimum distributions begin at age 73 (born 1951–1959) or 75 (born 1960 or later), whether you need the money or not. Every dollar converted in a cheap year is a dollar that will not be forced out at a possibly higher rate — and that will not push your Social Security taxation or Medicare premiums up. The window between retirement and RMD age is finite; once RMDs begin, they fill the low brackets on their own.

Try it in Deorbit Plan

Open the Strategy panel and set Conversion strategy to Fill bracket (retired years), choosing the bracket top (12/22/24/32%) and start/stop ages — the simulator converts up to the bracket each year and pays the tax from other accounts. Then run the Strategy Lab’s Tool 2 — Strategy sweep & frontier (open the Lab) to compare every conversion strategy against every Social Security claim age on identical market draws, with a cliff-margin readout showing how close each strategy comes to ACA and IRMAA thresholds.

Educational content only — not financial, tax, or investment advice.

Read this article in the interactive simulator →