Roth Conversion Ladder Calculator
Early retirees use Roth conversion ladders to access tax-deferred funds before age 59½ without 10% penalty. Convert in low-income years, wait 5 years, then withdraw.
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The Roth conversion ladder is the gold-standard early retirement strategy for accessing 401(k) and Traditional IRA money before age 59½ without the 10% early withdrawal penalty. The mechanic: convert Traditional money to Roth in low-income years (paying tax now), wait 5 years, then withdraw the converted principal tax-free and penalty-free at any age. This calculator projects your ladder size, annual conversion amount, and total tax cost.
The 5-Year Rule — Each Conversion Has Its Own Clock
Each Roth conversion has a separate 5-year clock. Conversion made in 2026 is available penalty-free in 2031 (after January 1, 2031). To bridge the first 5 years of retirement before any conversions become accessible, you need a non-Roth-conversion source: existing Roth contributions (always tax + penalty free), taxable brokerage accounts (qualifying for LTCG at lower rates), or savings. Many FIRE practitioners maintain a 5-year cash + bond ladder as the bridge fund.
Stack with 0% Long-Term Capital Gains Bracket
The most tax-efficient early retirement combines Roth conversions in the 12% federal bracket with 0% LTCG harvesting from taxable brokerage. 2026 0% LTCG bracket: $48,350 single / $96,700 MFJ taxable income. By managing AGI carefully (conversions + capital gains), you can pay $0-7K federal tax on $80K+ in living expenses. Layer in ACA subsidy optimization (premium tax credits drop sharply above 200% FPL) and you have an extraordinarily tax-efficient retirement.
Watch IRMAA and ACA Subsidy Cliffs
Roth conversions raise modified adjusted gross income (MAGI), which can: (1) Trigger ACA subsidy reductions or cliffs (was 400% FPL pre-IRA; now phaseout above 400% per Inflation Reduction Act through 2025; check current law for 2026). (2) Trigger IRMAA (Medicare income-related premiums) at 2-year lookback after age 63. (3) Tax Social Security benefits if you've started claiming. Run the full picture, not just income tax. See our IRMAA tipping point calculator.
Last updated May 2026. Sources: IRS Pub 590-A.