Roth Conversion Ladder Calculator
Plan a Roth conversion ladder for early retirement — annual conversion amount, five-year bridge fund and estimated conversion taxes.
How it works
Annual conversion = annual spending · Bridge fund = 5 × spending · Total tax = spending × years × tax-rate
A Roth conversion ladder lets early retirees tap tax-deferred savings before 59½ without the 10% penalty. Each year you convert roughly one year of expenses from a traditional account to Roth and pay ordinary tax on it; after the converted amount has seasoned five years, you withdraw the principal tax- and penalty-free. Because the first conversion is not accessible for five years, you need a separate bridge fund — taxable savings or already-contributed Roth basis — to cover living costs while the ladder matures.
Worked example
To cover $40,000 of annual spending, you convert $40,000 each year and hold a $200,000 five-year bridge fund. Over a 10-year ladder you convert $400,000; at a 12% marginal rate that is about $48,000 of conversion tax spread across the years.
Frequently asked questions
Why do I need a five-year bridge fund?
Each Roth conversion must sit for five tax years before its principal can be withdrawn penalty-free. The bridge fund — taxable brokerage money or existing Roth contributions — covers your spending during those first five years while the earliest conversions season.
How are conversions taxed?
A conversion adds to your ordinary taxable income in the year you make it. Many early retirees convert just enough to fill low tax brackets, keeping the marginal rate down while still building the ladder.
Is the annual conversion always equal to my expenses?
Roughly, but you can convert more in low-income years to fill a bracket, or less if you have other income. This tool uses one year of expenses per rung as a clean baseline.
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Educational estimate using simplified assumptions — not tax, legal or financial advice. Verify limits and rules with the IRS or a qualified advisor.