GLOSSARY · RETIREMENT WITHDRAWALS & EARLY ACCESS

Roth conversion ladder

Moving money from a traditional IRA or 401(k) to a Roth IRA a slice at a time, paying income tax on each conversion. Each converted amount can be withdrawn without the 10% early-withdrawal tax once five tax years have passed, starting January 1 of the conversion year, which lets early retirees reach their savings before 59½.

Also called: roth ladder, roth conversion

FORMULA

Money available in year N = the amount converted in year N − 5

COMPUTE IT WITH YOUR NUMBERS

Roth conversion ladder →How much to convert each year to access pre-tax money before 59½ at the lowest tax?Roth conversion calculator →How much should I convert to Roth between 60 and 73 without a Medicare surcharge or a Social Security tax spike?

LEARN IT PROPERLY

CHAPTER · RETIREMENT INCOME & IMPLEMENTATION · STRATEGIESRoth Conversions: When Paying Tax Early Pays Off CHAPTER · HEALTH INSURANCE OPTIMIZATION · DEEP DIVEPlanning for Medicare

SOURCES

Publication 590-B, Distributions from Individual Retirement Arrangements. Internal Revenue Service.

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