Roth Conversion Ladder Calculator

How this calculator works

The Roth conversion ladder is a multi-year tax-planning strategy that exploits a foundational asymmetry between traditional and Roth retirement accounts. Traditional IRA and 401(k) balances must distribute on the IRS Required Minimum Distribution schedule under IRC § 401(a)(9), beginning at age 73 under the SECURE Act 2.0 of 2022 (rising to 75 in 2033 for those born 1960 or later). Roth IRA balances, by contrast, have NO required distributions during the original owner's lifetime. The ladder shifts material balances out of the RMD-bound traditional bucket and into the RMD-free Roth bucket during low-income gap years, smoothing the lifetime tax bill and reducing the future RMD base.

This calculator models the federal-pure mechanics. It computes the optimal annual conversion sized to fill an unused lower-bracket headroom, projects year-by-year traditional and Roth balances forward at the supplied portfolio return, tracks the 5-year-per-conversion availability schedule under IRC § 408A(d)(3)(F), computes the first-year RMD reduction at the start-of-RMD age, and surfaces an NPV tax-savings comparison against the no-conversion baseline.

The statutory mechanics under IRC § 408A(d)(3)

IRC § 408A(d)(3) provides that a Roth conversion is includible in gross income in the year of conversion, taxed at ordinary income rates. There is no 10% early-withdrawal penalty under § 72(t) on the conversion itself (the conversion is not a distribution to the taxpayer; it is a rollover to a Roth account). The converted amount becomes principal in the Roth account.

IRC § 408A(d)(3)(F) imposes a separate 5-year holding period PER CONVERSION before the converted principal can be withdrawn tax- and penalty-free by a taxpayer under age 59½. This per-conversion clock is distinct from the general 5-year rule on Roth earnings (which runs from the date the first Roth contribution was made). The per-conversion clock is the structural feature that makes the strategy a LADDER rather than a single conversion: a user who plans to draw from converted balances starting at age 55 must begin converting at age 50 so the first rung is available at 55, the second at 56, and so on.

After age 59½, the per-conversion 5-year clock no longer applies. The user can withdraw any converted principal at will, and qualified Roth distributions (post-59½ AND post-5-year first-contribution clock) are fully tax-free on both principal and earnings.

The gap-year bracket-fill strategy

The canonical execution targets the low-income years between retirement and the start of Social Security and RMDs — typically ages 55 through 65 or so. During these years, the user has stopped earning wages and has not yet claimed Social Security; their taxable income consists of pension (if any), taxable interest, dividends taxed as ordinary income, and small distributions from taxable accounts. Total non-conversion taxable income is often $0 to $30,000, well below the top of the 12% bracket ($48,475 for single filers in 2026).

The conversion is sized to fill the headroom between non-conversion taxable income and the top of the target bracket, without crossing into the next bracket. Each year's conversion equals (top of target bracket) − (non-conversion taxable income). Repeat for 5-10 years and the strategy converts $150,000-$300,000 of traditional balance to Roth at a blended marginal cost of 10-22% federal, shifting that principal permanently out of the RMD base.

The 12% bracket fill is the most common target. The 22% bracket fill is the next step up when the bracket-fill space is large (or when the user has a sizable pension that already pushes them into the 22% bracket and so the marginal conversion rate is 22% regardless). Higher brackets (24%, 32%, 35%, 37%) are modeled here for completeness but rarely make sense — at those rates, the upfront tax cost typically exceeds the future RMD-tax savings even on a multi-decade horizon.

SECURE 2.0 and the lengthened gap window

The SECURE Act 2.0 of 2022 (Pub. L. 117-328) raised the RMD start age in two phases. For taxpayers who reached age 72 after December 31, 2022 (born 1951 or later), the RMD start age is now 73. For taxpayers born 1960 or later, the RMD start age rises further to 75, taking effect in 2033.

This lengthened gap window directly increases the value of the conversion ladder. A user retiring at 62 and born in 1962 has 13 years (62 to 75) of pre-RMD bracket-fill capacity, vs. 11 years (62 to 73) under the prior cohort. More years of bracket-fill mean more dollars converted at the low rate, more years of post-conversion Roth compounding before any forced traditional withdrawal, and a larger reduction in the eventual RMD base.

Worked example 1: canonical 12% bracket fill

A single retiree currently age 60 has a $1,000,000 traditional IRA balance, $25,000 of expected non-conversion taxable income each year (small pension plus taxable account dividends), and plans to run an 8-year ladder at a 6% portfolio return assumption with RMD age 73.

• Top of 12% bracket (2026 single): $48,475.
• Bracket headroom: $48,475 − $25,000 = $23,475.
• Annual conversion: $23,475.
• Total converted over 8 years: $187,800.
• Federal tax on each conversion: tax($48,475) − tax($25,000) ≈ $5,579 − $2,762 ≈ $2,817 per year.
• Total federal tax on conversions: ~$22,536.
• Roth balance at end of ladder (year 8): ~$240,000 after compounding.
• Roth balance at RMD age (73, 5 years later): ~$321,000.
• Traditional balance at RMD age: substantially below the no-ladder baseline.
• First-year RMD reduction: meaningful (several thousand dollars per year going forward).

Each year's conversion becomes withdrawable tax- and penalty-free 5 years later under IRC § 408A(d)(3)(F). Rung 1 is available in year 6, rung 2 in year 7, and so on. By age 70, the user has a fully-laddered Roth from which they can draw without restriction.

Worked example 2: 22% bracket fill on a larger traditional balance

Same retiree, but with $3,000,000 in traditional and a 22% bracket target.

• Top of 22% bracket (2026 single): $103,350.
• Bracket headroom: $103,350 − $25,000 = $78,350.
• Annual conversion: $78,350.
• Total converted over 8 years: $626,800.
• Federal tax per conversion: tax($103,350) − tax($25,000) ≈ $17,820 − $2,762 ≈ $15,058 per year.
• Total federal tax on conversions: ~$120,464.
• Roth balance at RMD age (5 years post-ladder): substantially larger than the 12% case.
• First-year RMD reduction: substantially larger as well.

The 22% strategy makes sense when (a) the traditional balance is large enough that even an aggressive 12% ladder would leave significant RMD exposure, (b) the user can pay the higher conversion-year tax cost from external funds, and (c) the user's expected RMD-era marginal bracket is 22% or higher — which is typical for retirees with seven-figure traditional balances.

Worked example 3: SECURE 2.0 born-1960+ cohort

Same starting facts as Example 1 but born in 1962 — RMD age 75 instead of 73.

• Years of pre-RMD runway: 75 − 60 = 15 years (vs. 13 under the earlier cohort).
• Run a 12-year ladder instead of 8: 12 × $23,475 = $281,700 total converted.
• Roth balance at end of ladder (year 12): substantially larger than the 8-year case.
• Roth balance at RMD age 75 (3 years post-ladder): roughly $400,000+.
• First-year RMD on the post-ladder traditional balance: meaningfully reduced.

The extra 2 years of RMD-age runway under SECURE 2.0 are not a small benefit. Combined with extra years of post-ladder Roth compounding, the total NPV value of the strategy is materially higher for the born-1960+ cohort.

The 5-year-per-conversion rule, illustrated

The 5-year clock under IRC § 408A(d)(3)(F) runs from January 1 of the conversion year. A December 2026 conversion becomes available January 1, 2031 — a wall-clock window of 4 years and 1 month. A January 2026 conversion becomes available January 1, 2031 also — 5 years exactly.

The clock runs separately for each conversion. For a ladder, the structure is:

• Year 1 conversion: available in Year 6 of the ladder timeline.
• Year 2 conversion: available in Year 7.
• Year 3 conversion: available in Year 8.
• Year 4 conversion: available in Year 9.
• Year 5 conversion: available in Year 10.

By year 6, the first rung is available. By year 10, the first 5 rungs are all available. The strategy works because by year 6 the user has FIVE YEARS of waiting tax-free Roth principal queued up — exactly what is needed to begin drawing without restriction.

Note that after age 59½ the per-conversion rule no longer applies. A user who begins the ladder at age 60 does not need to wait 5 years per rung — they can withdraw any converted principal at will. The 5-year rule is principally relevant for users running the ladder BEFORE age 59½ as part of an early-retirement strategy.

NPV comparison: ladder vs. no-conversion baseline

The calculator compares two scenarios. (1) The ladder: pay conversion tax in each ladder year, then pay (lower) RMD tax starting at the RMD age. (2) The baseline: no conversions, just pay (higher) RMD tax starting at the RMD age. Each future tax payment is discounted to today's present value at the supplied portfolio return.

The portfolio-return = discount-rate convention is the standard for like-for-like personal-finance comparisons: it uses the portfolio's own opportunity cost as the discount, asking "if I did not pay this dollar in tax, what would it be worth invested at the portfolio rate?". The output is the NPV difference. A positive NPV savings number means the ladder wins in present-value dollars.

The calculation uses the FIRST-YEAR RMD as a proxy for the lifetime RMD tax burden. A full multi-decade RMD projection requires mortality assumptions outside the scope of a planning tool. The directional result is what matters — the ladder typically saves $50,000 to $200,000 in NPV across a 10-year gap window on a $1M starting traditional balance, more on larger balances and with longer post-conversion compounding horizons.

Common errors

Paying conversion tax from the IRA itself. The optimal ladder pays conversion tax from external (after-tax, taxable-brokerage) funds. Withholding tax from the IRA on a conversion reduces the converted principal dollar-for-dollar, defeating the strategy's core mechanic. If the user is under age 59½, withholding from the IRA also triggers the 10% penalty under IRC § 72(t) on the withheld portion (the IRS treats the withheld amount as a distribution, not a conversion). The fix is to pay from external funds; if external funds are not available, the user should reconsider whether the ladder is the right strategy.

Missing the 5-year rule per conversion. Users sometimes assume that once a Roth account is open, all Roth dollars are immediately withdrawable. The 5-year-per-conversion rule under IRC § 408A(d)(3)(F) is distinct from the general first-contribution 5-year rule and applies independently to each conversion. A user under 59½ who converts in year 1 and tries to withdraw the converted principal in year 3 will face the 10% penalty under § 72(t) on the early withdrawal of converted principal. The fix is to plan the ladder so the first rung becomes available 5 years before the planned first withdrawal.

Ignoring the IRMAA cliff. Medicare Income-Related Monthly Adjustment Amount (IRMAA) is a surcharge on Medicare Part B and Part D premiums that kicks in at discrete modified adjusted gross income (MAGI) thresholds. The lookback is two years: 2026 premiums are based on 2024 MAGI. The structure is a cliff, not a phase-in — crossing a tier by one dollar adds the full surcharge. A Roth conversion that fills the 22% federal bracket (top at $103,350 for single 2026) can push the user past the first IRMAA tier and add several thousand dollars per year of Medicare premium exposure two years later. This calculator does NOT model IRMAA. Users near age 63+ should run our IRMAA Tier calculator in tandem to verify no cliff is breached before sizing the conversion.

Crossing into the next bracket. Over-converting and pushing income into the next bracket destroys the bracket-fill logic — the marginal rate on the over-conversion is the next bracket's rate, not the target rate. The fix is to size the conversion to STAY IN the target bracket with margin for unexpected income (capital-gain distributions from mutual funds, taxable-account dividends that come in higher than projected, etc.). A conservative approach is to leave $5,000 to $10,000 of headroom in the target bracket to absorb year-end surprises.

Forgetting the pro-rata rule. Users with nondeductible basis in a traditional IRA must allocate the conversion pro-rata between pre-tax and after-tax amounts under IRC § 408(d)(2). The pro-rata calculation aggregates ALL traditional IRA balances (including SEP and SIMPLE) across all accounts, computes the after-tax fraction, and treats that fraction of each conversion as tax-free principal-return. The complication makes the conversion-tax computation substantially more complex than this calculator models. The fix is to consult a CPA before conversion if you have any nondeductible traditional basis — the pro-rata rule is a frequent audit target and the calculation needs to be precise.

Roth inheritance: the secondary value driver

Beyond RMD reduction, a fully-laddered Roth IRA is a powerful intergenerational wealth-transfer vehicle. Under SECURE 1.0 (2019), most non-spouse beneficiaries of an inherited Roth IRA must fully distribute the account within 10 years of the original owner's death (the "10-year rule"). During those 10 years, there are no annual RMDs on the inherited Roth — the beneficiary can let it compound and then withdraw the full balance in year 10, all tax-free.

A spouse beneficiary can roll the inherited Roth into their own Roth and retain the no-RMD treatment for their own lifetime.

A $1,000,000 Roth balance left to an adult child can compound tax-free for 10 years (potentially doubling to $2,000,000 at a 7% return) and transfer to the child fully tax-free. The same $1,000,000 in traditional IRA would generate ordinary-income tax at the child's bracket on every dollar withdrawn — typically 22 percent to 37 percent federal, plus state. This inheritance asymmetry is the secondary value driver of the ladder beyond RMD reduction, and for users with substantial intent to leave wealth to non-spouse beneficiaries it can be a larger value than the RMD-tax reduction itself.

When the ladder is NOT the right strategy

The ladder works when (a) the user has a low-income gap window, (b) the user can pay conversion tax from external funds, (c) the user's expected future RMD-era marginal bracket is at or above the current bracket-fill target rate, and (d) the user does not have an unusually short post-conversion horizon (the strategy needs roll-forward time to pay back the upfront tax via Roth compounding).

The ladder is a poor fit when (a) the user has no gap window — wage income continues into the RMD years, (b) the user has no external after-tax funds and would need to withhold from the IRA, (c) the user's expected RMD-era bracket is LOWER than the bracket being filled now (rare but possible for users with very large traditional balances who plan to give substantial amounts to charity via Qualified Charitable Distributions under IRC § 408(d)(8)), or (d) the user has a short horizon — terminal illness, very advanced age. Run the calculator with realistic assumptions and verify the NPV savings is meaningfully positive before executing.

Last reviewed

This calculator was last reviewed against the statutes and IRS guidance referenced above on 2026-05-16. SECURE Act 2.0 RMD age is 73 under current law, rising to 75 in 2033 for those born 1960 or later. The 2026 single-filer ordinary-income bracket schedule used for the bracket-fill computation is the inflation-extended TCJA schedule. This is an informational planning tool, not tax advice — consult a licensed CPA or tax attorney before executing any conversion strategy.