Roth Conversion Ladder Calculator

The Roth Conversion Ladder combines several IRS rules to give early retirees penalty-free access to retirement funds: 1. **Roth conversions** let you move money from a Traditional IRA to a Roth IRA. You pay income tax on the converted amount in the year of conversion. 2. **The 5-year rule** (per Pub. 590-B): each conversion starts its own 5-year clock on January 1 of the conversion year. Withdraw before 5 years pass, and you owe a 10% penalty. 3. **IRS ordering rules** for Roth distributions: regular contributions come out first (always tax/penalty-free), then conversions on a FIFO basis, then earnings last. By converting each year, you build a 'ladder' of 5-year-maturing conversions from age 45 through 59.5.

**1. Converted amount vs earnings.** The CONVERTED amount can be withdrawn at any time — but the 10% penalty applies if withdrawn before 5 years. The amount was already taxed at conversion. EARNINGS need both 5 years AND age 59.5 for tax-free withdrawal. **2. Each conversion has its own 5-year clock.** Conversions don't share one clock. A 2026 conversion matures Jan 1, 2031; a 2027 conversion matures Jan 1, 2032. **3. Bridge is not always 5 years.** Roth IRA contributions are always accessible (no 5-year wait). The bridge period is the gap until enough conversions have seasoned.

Ideal if: you have 5+ years of living expenses in Roth contributions, taxable accounts, or other non-IRA sources; you retire before age 59.5 with substantial Traditional balances; you expect a higher tax bracket later (RMD years start at 73); you can stay within a low tax bracket during conversion years. NOT ideal if: you have no bridge funding (consider 72(t) SEPP); you have very small Traditional balances; you expect much lower tax rates in the future.