Roth IRA Conversion Ladder 2026

The Roth conversion ladder is the most powerful tax strategy for early retirees and FIRE enthusiasts.

How It Works

Step 1: Convert Traditional IRA/401k to Roth IRA. Step 2: Pay income tax on converted amount. Step 3: Wait 5 years (seasoning period). Step 4: Withdraw tax-free after age 59½.

Tax Implications

Converted amount is ordinary income. Fill low brackets first. 10% early withdrawal penalty if under 59½ (with exceptions). Strategic: convert $48,475/year to stay in 12% bracket.

Five-Year Rule

Each conversion has its own 5-year clock. Must be 59½ + 5 years for tax-free access. Plan ahead: start conversions 5 years before needed.

FIRE Strategy

Convert during low-income years (sabbatical, early retirement). Use taxable account for 5-year gap. Roth conversions bridge the gap. Tax-free growth forever.

Optimal Conversion Amount

Fill 10% bracket: $11,925. Fill 12% bracket: $48,475. Fill 22% bracket: $103,350. Sweet spot: stay under $48,475 for lowest rate.

Benefits

No RMDs. Tax-free withdrawals. Tax-free growth. Estate planning advantage. Hedge against future tax increases.