Roth Conversion Ladder Calculator

How Much Should You Convert to Roth Each Year?

A Roth conversion ladder lets you systematically move money from traditional retirement accounts to Roth, filling lower tax brackets each year. Done right, it can save you $100,000+ in lifetime taxes. Plan your conversion strategy free.

Roth Conversion Ladder Example: $500,000 Traditional IRA

Here's how a Roth conversion ladder works for someone who retires at 60 with a $500,000 Traditional IRA and plans to claim Social Security at 67:

Strategy: Convert $55,000/year from ages 60-67 (before Social Security starts), staying within the 22% tax bracket. Total cost: ~$66,000 in taxes over 7 years.

Annual Conversion

$55,000/yr

Ages 60-67 (7 years)

Tax Cost Per Year

~$9,400

Stays in 22% bracket

RMDs Eliminated

$385,000

Moved to tax-free Roth

Estimated Lifetime Tax Savings

$127,000

vs. no conversions

Without conversions, this person would face RMDs of $28,000+ per year starting at 73, taxed at 22-24% on top of their Social Security income. By converting during the low-income gap years (60-67), they pay 22% on the conversions but avoid 24%+ on future RMDs. The Roth money also grows tax-free forever.

Plan Your Roth Conversion Ladder

See optimal conversion amount per year based on your tax brackets
Year-by-year conversion schedule with projected tax cost
Compare with vs. without conversion scenarios
See impact on future RMDs and Medicare premiums

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What Is a Roth Conversion Ladder?

A Roth conversion ladder is a strategy of converting a set amount from a Traditional IRA or 401(k) to a Roth IRA each year over multiple years. Instead of converting everything at once (which could push you into the highest tax brackets), you spread the conversions across years to stay in lower tax brackets.

How the Ladder Works

Each year, you convert an amount that fills your current tax bracket without spilling into the next one. For example, if the 22% bracket ends at $89,075 of taxable income and you have $34,000 from other sources, you could convert up to $55,075 and stay in the 22% bracket.

You repeat this each year, building a "ladder" of Roth conversions. After 5 years, the earliest conversions become available for penalty-free withdrawal (the 5-year rule), giving you a rolling source of tax-free income.

The Best Window for Conversions

The optimal conversion window is typically between retirement and age 72-73, especially if you retire before claiming Social Security. During these "gap years," your taxable income drops, putting you in lower brackets. This is when each dollar converted costs the least in taxes.

Key Tax Brackets for 2024 (Single Filers)

10% bracket: $0 - $11,600
12% bracket: $11,601 - $47,150
22% bracket: $47,151 - $100,525
24% bracket: $100,526 - $191,950

Most Roth conversion ladder strategies aim to fill up to the top of the 22% or 24% bracket. Converting beyond that rarely makes sense unless you expect to be in an even higher bracket in the future.

Use our free Roth conversion calculator for a quick estimate, or create a free plan for the full year-by-year conversion schedule.

Roth Conversion Ladder for Early Retirees (FIRE)

The Roth conversion ladder is especially popular in the FIRE (Financial Independence, Retire Early) community because it solves a key problem: how to access traditional retirement funds before age 59.5 without penalties.

The Early Retirement Problem

If you retire at 45 or 50, most of your savings may be in a 401(k) or Traditional IRA. Withdrawing before 59.5 triggers a 10% early withdrawal penalty on top of income taxes.

How the Ladder Solves It

Money converted from Traditional to Roth becomes available for penalty-free withdrawal after 5 years, regardless of your age. So if you convert $50,000 at age 45, that $50,000 is available penalty-free at age 50. Convert $50,000 at 46, available at 51, and so on.

By starting the ladder in year one of early retirement, you create a rolling 5-year pipeline of accessible funds. You just need enough in taxable accounts or Roth contributions (which are always available penalty-free) to cover the first 5 years.

Example FIRE Conversion Ladder

Age 45: Retire. Convert $50,000 from Traditional to Roth. Live on taxable savings.
Age 46-49: Continue converting $50,000/year. Still living on taxable savings.
Age 50: The first $50,000 conversion is now available penalty-free. Start withdrawing from Roth.
Age 50+: Each year, a new conversion becomes available. The ladder is now self-sustaining.

Create a free RetirePlanAI account to model your conversion ladder with your actual numbers.

Roth Conversions and Required Minimum Distributions (RMDs)

One of the biggest benefits of a Roth conversion ladder is reducing or eliminating future Required Minimum Distributions.

The RMD Problem

Starting at age 73 (or 75 for those born after 1960), you must withdraw a minimum amount from Traditional IRAs and 401(k)s each year. These withdrawals are taxed as ordinary income. As your balance grows, so do the required withdrawals, potentially pushing you into higher tax brackets.

How Conversions Help

Money moved to a Roth IRA is no longer subject to RMDs. By converting during low-income years before 73, you pay taxes at a lower rate than you would on forced RMDs later. For someone with a large Traditional IRA, this can save tens of thousands in taxes over their lifetime.

IRMAA and Medicare Premiums

Large RMDs can also trigger IRMAA (Income-Related Monthly Adjustment Amount) surcharges on Medicare premiums. In 2024, individuals with modified adjusted gross income above $103,000 pay higher Medicare Part B and Part D premiums. Converting before RMDs start helps keep income below these thresholds.

See our RMD calculator to estimate your future required distributions, then plan your conversion ladder to minimize the tax impact.

Frequently Asked Questions

What is a Roth conversion ladder?

A Roth conversion ladder is a strategy of converting a portion of your Traditional IRA or 401(k) to a Roth IRA each year over several years. By spreading conversions across multiple years, you stay in lower tax brackets and minimize the total tax cost of moving your savings to tax-free Roth status.

How much should I convert to Roth each year?

The optimal amount depends on your current tax bracket and other income. Most strategies aim to fill the 22% or 24% bracket without spilling into the next one. For example, if your other income puts you at $45,000 and the 22% bracket ends at $100,525, you could convert up to $55,525.

What is the Roth conversion 5-year rule?

Each Roth conversion has its own 5-year waiting period before the converted amount can be withdrawn penalty-free if you're under 59.5. After age 59.5, the 5-year rule only applies to earnings. This rule is why early retirees need to plan their ladder carefully.

Should I do a Roth conversion if I'm already retired?

Often yes, especially in the years between retirement and RMDs (before age 73). If your income is lower than it will be once Social Security and RMDs start, converting now at a lower tax rate saves money long-term. Our planner models your specific situation year by year.

Do Roth conversions reduce my RMDs?

Yes. Money converted to Roth is no longer subject to Required Minimum Distributions. This is one of the primary motivations for conversion ladders. Reducing your Traditional IRA balance before age 73 means lower forced withdrawals and lower taxes in later retirement.

Can I convert my 401(k) to Roth while still working?

Some 401(k) plans allow in-plan Roth conversions, but not all. If your plan doesn't offer this, you can roll your 401(k) to a Traditional IRA after leaving your employer, then convert from there. If you're still employed, check with your plan administrator.

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