Roth Conversion Ladder Calculator

What is a Roth conversion ladder?

Money in a traditional IRA or 401(k) is normally locked behind a 10% additional tax until age 59½ (IRC §72(t)). A Roth conversion ladder is a schedule for getting it out early without that penalty: each year, you convert one future year’s spending from the traditional account to a Roth IRA and pay ordinary income tax on the conversion. Five tax years later, that converted amount — the “rung” — can be withdrawn from the Roth tax-free and penalty-free, even decades before 59½.

Repeat the conversion every year and the rungs season one per year, in order, like a ladder: convert at 40, spend it at 45; convert at 41, spend it at 46. The strategy is popular in the FIRE community because most early retirees hold the bulk of their savings in pre-tax accounts, and because retirement usually drops taxable income into low brackets — making the conversion tax far cheaper than it would have been while working.

The 5-year rule — where the ladder comes from

IRC §408A(d)(3)(F) imposes a recapture rule: if you withdraw converted amounts within the 5-taxable-year period beginning with the year of the conversion, the 10% early-distribution tax of §72(t) applies to the withdrawal as if it were taxable income — even though the conversion tax was already paid. Wait out the five years and the penalty disappears.

Two details matter. First, each conversion has its own clock — a 2026 conversion and a 2027 conversion season independently, which is exactly what makes a ladder of annual conversions work. Second, the clock starts on January 1 of the conversion year (IRS Publication 590-B), so a conversion executed in December is seasoned after barely more than four calendar years. This calculator models whole tax years — the conservative reading.

convert in year k → withdrawable in year k + 5 rung size (year k) = spending need in year k + 5 tax due in year k = conversion × marginal rate

Why the withdrawal is tax-free: the ordering rules

Roth IRA distributions follow strict ordering rules (Pub 590-B): direct contributions come out first, then conversions — first-in, first-out, taxable portion first — and earnings come out last. Withdrawing a seasoned conversion is a return of money you already paid tax on in the conversion year, so no further tax is due; and because its 5-year period has run, no penalty is due either. The ladder never touches earnings: those stay invested, because withdrawing earnings before 59½ (and before the account itself is qualified) is both taxable and penalized.

This is also why the calculator needs no investment-return assumption. Each rung is sized to the year it funds; growth on the converted dollars stays in the Roth as a bonus, not a budget line. A projection would need a return guess — a schedule doesn’t.

The bridge — the hard part nobody budgets for

The first rung isn’t usable until year six. The first five years of early retirement must be funded from money that is accessible without penalty today: a taxable brokerage account, cash, or existing Roth IRA contribution basis (direct contributions are withdrawable at any time, tax- and penalty-free, under the same ordering rules). On top of spending, the conversion tax for each rung is also due during these years and should be paid from non-retirement money — paying it by withholding from the conversion itself makes the withheld portion an early distribution, with the 10% penalty on it.

The bridge is the most common reason a ladder fails in practice, which is why this calculator makes it a first-class output: it totals the first five years of (inflation-adjusted) spending, compares it to the accessible funds you entered, and flags any shortfall instead of hiding it.

Worked example

Retire at 40 needing $40,000 a year, with 3% inflation and a 22% marginal rate on conversions. There are 20 years to cover before the penalty ends (ages 40 through 59 — you turn 59½ during the age-59 year). The first five are bridge years; the remaining 15 are ladder years, so 15 conversions are needed, one per year from age 40 through 54.

years to cover = 60 − 40 = 20 → 5 bridge + 15 ladder rung 1 (convert at 40, spend at 45) = $40,000 × 1.03⁵ = $46,371 tax on rung 1 = $46,371 × 22% = $10,202 bridge needed = $40,000 × (1.03⁵ − 1) / 0.03 = $212,365

Age 54 is the last useful conversion for anyone: a rung converted at 55 seasons at 60, when the penalty is already gone. If you’re 55 or older, the calculator says so plainly and points to the alternatives instead of printing a useless schedule.

Ladder vs. 72(t)/SEPP — the two competing answers

The other IRS-sanctioned route to penalty-free early withdrawals is a 72(t) series of substantially equal periodic payments. The trade-off is timing versus flexibility. A SEPP pays out immediately — no bridge required — but the payment is locked by formula, and modifying or stopping the series before the later of age 59½ or five years triggers retroactive penalties plus interest on every prior distribution. A ladder demands a five-year bridge up front, but each year’s conversion is a fresh, independent decision: you can size it to that year’s tax situation, pause it, or abandon the strategy with no retroactive consequence. The two can also be combined — a small SEPP to narrow a bridge gap, with a ladder behind it. Our 72(t)/SEPP calculator (linked below) runs the other side of the comparison.

What this calculator does not model

• Bracket-by-bracket conversion tax. One flat marginal rate is applied to every conversion. Real conversions stack on top of other income and fill brackets progressively; a large conversion can spill into a higher bracket. The flat rate is a labeled simplification.
• Existing after-tax basis. Conversions are assumed 100% taxable. If your traditional IRA holds nondeductible contributions, the Form 8606 pro-rata rules reduce the taxable share — see our Backdoor Roth calculator for that math.
• MAGI cliffs. Conversion income raises MAGI, which can reduce ACA premium subsidies, trigger IRMAA surcharges, or phase out credits. For early retirees buying marketplace insurance this is often the binding constraint on conversion size — named here, not computed.
• State income tax. Most states tax conversions as ordinary income too; rates vary by state and year.
• Investment returns. Deliberately absent. Rungs are sized to the year they fund and only converted principal is withdrawn, so the schedule needs no return assumption. Growth stays in the Roth.
• 401(k) plan mechanics. Money usually must be rolled from a 401(k) to a traditional IRA (or converted in-plan) before laddering; plan rules on partial rollovers vary.

Sources: IRS Publication 590-B (distributions, ordering rules, 5-year conversion period) · IRC §408A(d)(3)(F) · IRC §72(t) · IRS Form 8606

This tool is for informational and educational purposes only. It is not financial, tax, or legal advice. Conversion timing and sizing interact with brackets, ACA subsidies, and state tax in ways this schedule does not capture. Consult a qualified tax professional before executing a Roth conversion ladder.

Last reviewed: July 2026 · Per IRC §408A(d)(3)(F), IRC §72(t), and IRS Publication 590-B.