Roth conversion ladder: five-year rungs, the tax on each, the gap to fund
Convert part of a traditional IRA to a Roth IRA each year, wait five tax years, and that converted amount comes out with no tax and no 10 %, years before 59½.
Spending to cover before the first rung
$250,000
Five years from other money. Conversions cost $1,900 of federal tax in all ($380 a year).
| First rung free on | January 1, 2031 |
| Tax on one conversion | $380 |
| Effective rate on it | 1.1 % |
| Year | Age | Converted | Tax | Spendable |
|---|---|---|---|---|
| 2026 | 46 | $36,000 | $380 | $0 |
| 2027 | 47 | $36,000 | $380 | $0 |
| 2028 | 48 | $36,000 | $380 | $0 |
| 2029 | 49 | $36,000 | $380 | $0 |
| 2030 | 50 | $36,000 | $380 | $0 |
| 2031 | 51 | $0 | $0 | $36,000 |
| 2032 | 52 | $0 | $0 | $36,000 |
| 2033 | 53 | $0 | $0 | $36,000 |
| 2034 | 54 | $0 | $0 | $36,000 |
| 2035 | 55 | $0 | $0 | $36,000 |
Worked out by Radif Partners · How we calculate · figures read on irs.gov and healthcare.gov · not personal financial advice
A Roth conversion ladder moves money from a traditional IRA or old 401(k) into a Roth IRA one slice a year. Each slice is taxed as income in the year you convert, and Publication 590-B gives every conversion its own five-year period starting on January 1 of that year: a conversion made in December 2026 counts from January 1, 2026, and can be withdrawn without the 10 % additional tax from January 1, 2031. Converted in early retirement, the slices fill the low brackets: a married couple with no other income pays nothing on the first $32,200 thanks to the 2026 standard deduction, and $380 on a $36,000 conversion. The catch is the wait. The first five years of spending must come from other money, $250,000 for a couple living on $50,000. Conversions also raise the income that sets the Marketplace premium credit. The calculator above lays out each rung.
The five-year clock, read from Publication 590-B
The ladder rests on one passage of the Roth chapter (Publication 590-B, chapter 2). If you take money from a Roth IRA within the five-year period "starting with the first day of your tax year in which you convert", you may owe the 10 % additional tax on the part of the conversion you had to include in income. A separate period runs for each conversion. The IRS example converts on February 25, 2025, and the period starts on January 1, 2025.
Two practical results follow. A conversion late in the year buys almost a full year of the clock for free: December 2026 and January 2026 open on the same date, January 1, 2031. And the period for conversions is not the one that makes a distribution qualified, which runs from your first Roth contribution and also needs age 59½. A rung that has passed its five years leaves without the 10 % but still follows the ordering rules, after your regular contributions. The Roth withdrawal rules page shows that order on an example.
A five-rung ladder for a couple who stop at 46
A married couple stops working in 2026 at 46 and converts $36,000 each year for five years, with no other taxable income. Each conversion costs $380 of federal tax: the first $32,200 is covered by the standard deduction and the rest falls in the 10 % bracket. Over five years that is $1,900. From 2031 each rung pays $36,000 a year, short of their $50,000 budget by $14,000.
| Year | Age | Converted | Federal tax | Spendable from the ladder |
|---|---|---|---|---|
| 2026 | 46 | $36,000 | $380 | $0 |
| 2027 | 47 | $36,000 | $380 | $0 |
| 2028 | 48 | $36,000 | $380 | $0 |
| 2029 | 49 | $36,000 | $380 | $0 |
| 2030 | 50 | $36,000 | $380 | $0 |
| 2031 | 51 | $0 | $0 | $36,000 |
| 2032 | 52 | $0 | $0 | $36,000 |
| 2033 | 53 | $0 | $0 | $36,000 |
| 2034 | 54 | $0 | $0 | $36,000 |
| 2035 | 55 | $0 | $0 | $36,000 |
The five empty years at the top of the table are the hard part. $250,000 of spending has to come from somewhere other than the ladder: a taxable brokerage account, Roth contributions already in the account, a governmental 457(b), or a 401(k) left in the year you turned 55. Without such a reserve the ladder cannot start at 46. Building the ladder while still employed is possible, though the conversions then stack on a salary and cost far more per dollar.
Size your own rungs
Spending to cover before the first rung
$250,000
| First rung free on | January 1, 2031 |
| Tax on one conversion | $780 |
| Effective rate on it | 2.0 % |
How much to convert each year: filling the low brackets
The tax cost of a conversion depends on what else is on the return. With no salary, the first slice is free up to the standard deduction ($16,100 single, $32,200 joint in 2026), then taxed at 10 % and 12 %. The 12 % bracket ends at $50,400 of taxable income for a single filer and $100,800 for a couple, so the ordinary income that still fits under 22 % is $66,500 and $133,000.
| Converted (single) | Federal tax | Average rate |
|---|---|---|
| $16,100 | $0 | 0.0 % |
| $30,000 | $1,420 | 4.7 % |
| $50,000 | $3,820 | 7.6 % |
| $66,500 | $5,800 | 8.7 % |
| $100,000 | $13,170 | 13.2 % |
| Converted (joint) | Federal tax | Average rate |
|---|---|---|
| $32,200 | $0 | 0.0 % |
| $60,000 | $2,840 | 4.7 % |
| $100,000 | $7,640 | 7.6 % |
| $133,000 | $11,600 | 8.7 % |
| $160,000 | $17,540 | 11.0 % |
Converting up to the top of the 12 % band costs $11,600 for a couple, an average of 8.7 %. Whether that beats waiting depends on the bracket you expect later, a guess this page does not make for you. Long-term gains sold in the same year sit on top of the conversion, so a larger conversion can push gains out of the 0 % band; the 0 % capital gains page shows the interplay.
Conversions and the Marketplace premium credit
A conversion is income on your return, so it enters the modified adjusted gross income (MAGI) that sets the premium tax credit for coverage bought on HealthCare.gov. For a household of two in 2026, the poverty line used is $21,150 and the credit stops above $84,600, which is 400 % of it. At $36,000 of MAGI the couple sits at 170 % of the poverty line and is expected to pay 5.16 % of income toward the benchmark plan, $155 a month.
What a conversion does to your premium
You pay per month
$255
| Poverty line used | $21,150 |
| Your required share of income | 5.16 % |
| Credit per year | $16,141 |
| Income ceiling for any credit | $84,600 |
The line works in both directions. Converting too much past $84,600 wipes out the whole credit; converting too little can leave income under the poverty line, where HealthCare.gov says you will probably not qualify for Marketplace savings and may qualify for Medicaid instead (HealthCare.gov). A rung sized inside that window first, and checked against the brackets second, keeps both the credit and the low tax. The subsidy cliff page gives the line for every household size.
What can break the plan
Withdrawing a rung before its January 1 brings back the 10 % on the taxable part, in the year you take it, even though the income tax was paid at conversion. After 59½ the clock no longer matters for the additional tax. And the conversion figures above are fixed dollars: if the market falls, the rung you can draw is the amount converted, while any loss sits on the earnings layer that waits for 59½ anyway.