A Roth conversion ladder is a series of partial conversions done across multiple years instead of one large conversion. The term describes two different strategies with different goals, and most articles blur them together. John Shedenhelm builds the second version for nearly every client, and it’s the one that saves the most tax.
The Two Ladders
Ladder one: the early access ladder. Someone retiring at 45 or 50 converts a chunk of their 401(k) each year, waits five years for each conversion to season, then withdraws that converted principal penalty-free before 59½. The goal is access to retirement money early.
Ladder two: the bracket-filling ladder. Someone retiring at 62 converts a measured amount each year through age 72, sized to fill a target tax bracket without spilling into the next one. The goal is a smaller lifetime tax bill and smaller required minimum distributions at 73.
Same mechanics, opposite purposes. The early access ladder is about liquidity. The bracket-filling ladder is about rate arbitrage.
If you’re retiring in your 60s, ladder two is yours. Most of what gets written about conversion ladders online is written for ladder one, which is why the advice often doesn’t fit.
Did You Know? Each conversion starts its own separate five-year clock. Convert in 2026 and that money is accessible penalty-free in 2031. Convert again in 2027 and that batch unlocks in 2032. The clocks run in parallel, which is what makes the early access version work as a ladder rather than a single wait.
How the Bracket-Filling Ladder Works
The window opens the year your paycheck stops and closes the year required minimum distributions begin at 73. For most retirees that’s somewhere between five and twelve years.
Each year, you convert enough to fill your target bracket and no more. Here’s what the space looks like in 2026 for a married couple, both over 65, with no other income:
| Item | Amount |
|---|---|
| Standard deduction (MFJ) | $32,200 |
| Additional standard deduction, age 65+, two people | $3,300 |
| Senior deduction, two people | $12,000 |
| Income before any federal tax | About $47,500 |
| Top of the 12% bracket (taxable income) | $100,800 |
| Total conversion room at 12% or below | About $148,000 |
Source: IRS 2026 inflation adjustments and the 2026 rate tables. The $6,000 senior deduction is separate from the age-65 additional standard deduction, phases out above $150,000 of modified income for joint filers, and is scheduled through 2028.
Run that for eight years and you’ve moved well over a million dollars into a Roth at an average rate around 10%. The same dollars distributed as RMDs after 73, stacked on Social Security, would likely come out at 22% or 24%.
That spread is the entire point of the ladder.
Why Not Just Convert It All at Once?
Because tax brackets are progressive, and a single large conversion wastes the low ones.
Convert $1 million in one year and most of it gets taxed at 32% or 35%. Convert $125,000 a year for eight years and nearly all of it stays inside 12% and 22%. Same dollars, dramatically different tax.
A single large conversion also triggers Medicare surcharges for a full year, and it can push a retiree under 65 out of marketplace premium tax credits entirely.
Pro Tip: Do your conversion in November or early December, not January. By late in the year you know your actual dividends, capital gains, and other income, so you can size the conversion to hit your bracket ceiling precisely instead of guessing in January and overshooting.
Building the Ladder: A Year-by-Year Method
The process the team at Eagle Financial Solutions follows is the same every year.
- Project the endpoint first. Calculate what the pre-tax balance and first RMD look like at 73 if you do nothing. That number sets how aggressive the ladder needs to be.
- Pick the target bracket. Usually the top of 12% or the top of 22%, depending on the size of the future RMD problem.
- Measure the year’s baseline income. Interest, dividends, capital gains, part-time work, pension, and Social Security if claimed.
- Subtract to find conversion room. Bracket ceiling minus baseline income equals the conversion amount for that year.
- Check the cliffs before executing. Medicare surcharge thresholds, marketplace subsidy limits, and the 0% capital gains bracket all compete for the same income space.
- Convert late in the year and pay the tax from outside cash.
Step five is the one that separates a real ladder from a spreadsheet exercise. The bracket ceiling is rarely the binding constraint. A Medicare cliff or a health subsidy phase-out usually bites first.
Did You Know? Medicare’s income-related surcharge uses your tax return from two years prior. Your 2026 premium is set by your 2024 income. A ladder that runs through ages 63 and 64 shows up in your Medicare bill at 65 and 66, so those two rungs need to be sized with the surcharge thresholds in view.
Backdoor and Mega Backdoor: Different Tools, Same Destination
Two related strategies get grouped with conversion ladders, and they serve a different phase of life.
A backdoor Roth conversion is for people still working whose income exceeds the Roth IRA contribution limits. In 2026, direct Roth contributions phase out between $242,000 and $252,000 for joint filers and $153,000 to $168,000 for single filers. Above that, you contribute to a traditional IRA and convert it immediately.
The catch is the pro-rata rule. If you hold any pre-tax IRA balance, the conversion is taxed proportionally across all your IRA money, not just the new contribution. Rolling old IRA balances into a workplace 401(k) first usually solves it.
A mega backdoor Roth conversion uses after-tax contributions inside a 401(k), moved to a Roth account. It only works if your plan permits after-tax contributions and in-plan conversions or in-service withdrawals. Many plans don’t. When available, it can shelter far more than the standard limits allow.
Both are accumulation tools. The conversion ladder is a distribution tool. Building meaningful Roth balances during your working years through a deliberate contribution order reduces how much laddering you need later. If you’re new to these mechanics, Retirement 101 covers the fundamentals first.
The ladder decision itself rests on the five-question conversion framework and feeds directly into the broader withdrawal sequencing plan that runs alongside it.
When a Ladder Doesn’t Make Sense
Three situations where we skip it.
You expect a permanently lower bracket than today, which happens with a large pension ending or a planned move to a no-income-tax state. You plan to leave the IRA to charity, since a charity pays no tax on it either way. Or you can’t pay the conversion tax from outside funds, in which case the arithmetic falls apart before it starts.
Pro Tip: State tax is the rung most people forget. Ohio taxes conversion income the same as ordinary income, so a ladder run before a move to Florida or Tennessee costs more than the same ladder run after. If a move is on the table within a few years, sequence the ladder around it.
Morningstar’s research on safe withdrawal rates is a useful companion here, since the size of your ladder and the size of your withdrawals compete for the same bracket space each year.
Frequently Asked Questions
What is a Roth conversion ladder?
A Roth conversion ladder is a series of partial Roth conversions spread across several years. Retirees use it to fill low tax brackets before required minimum distributions begin at 73, while early retirees use it to access converted principal penalty-free after each five-year waiting period.
How many years should a Roth conversion ladder run?
Most ladders run from the year employment income stops until age 72, typically five to twelve years. The right length depends on how large your pre-tax balance is and how much bracket space is available each year.
What is a backdoor Roth conversion?
A backdoor Roth conversion is a nondeductible traditional IRA contribution converted to a Roth, used by savers whose income exceeds the direct Roth contribution limits. Existing pre-tax IRA balances trigger the pro-rata rule and can make the conversion partly taxable.
Can I do a Roth conversion ladder after age 73?
Yes, but you must take your required minimum distribution first, and the RMD cannot be converted. Conversions after 73 still shrink future RMDs and improve the tax treatment of what your heirs inherit.
The Bottom Line
A Roth conversion ladder turns one expensive tax event into a series of cheap ones by spreading conversions across the low-income years between retirement and 73. The version most retirees need is the bracket-filling ladder, sized each year against real income and checked against the Medicare and subsidy cliffs before anything moves.
Every year you spend without a ladder is a year of low-bracket space you can’t get back. Schedule a conversion ladder analysis with John Shedenhelm or explore our personal financial solutions to size the first rung before December 31.
This article is for educational purposes and is not individualized investment, tax, or legal advice. Tax figures reflect 2026 federal rules and are subject to change. Roth conversion outcomes depend on filing status, state taxes, and personal circumstances. Consult a qualified tax professional before converting.
