Roth conversion ladder
Also: Roth conversion ladder, conversion ladder, Roth ladder
A multi-year strategy of converting pre-tax retirement dollars to Roth in staged annual amounts sized to fit inside lower tax brackets, building future tax-free income and reducing future RMDs.
A Roth conversion ladder converts portions of a traditional IRA or 401(k) to Roth over several years, paying tax on each slice at the current marginal rate. The strategy is most valuable during gap years between peak earnings and Social Security claiming (ages 60 to 70), when income is low and bracket space is available. It reduces future required minimum distributions, which begin at age 73 (age 75 starting in 2033 under SECURE 2.0), and converts assets to a tax-free vehicle that compounds without drag.
Example: a 62-year-old retiree with $2.5 million pre-tax and no earned income converts $100,000 per year to Roth for eight years, paying 22% federal on each conversion. Total tax: $176,000 across eight years. Compared to holding the pre-tax balance and drawing at required minimum distributions at age 73 at a 24% to 32% bracket, the ladder saves approximately $150,000 in lifetime federal tax on the converted slices.
Common mistake: running conversions in a year with large capital gains or Roth IRA income that pushes the conversion into a higher bracket than planned.
Roth conversion ladders matter at retirement between 59 1/2 and RMD age, and any year with a predictable low-income window.