Retiring before 59½? The ladder converts Traditional to Roth in low-income years so each conversion is accessible tax-free five years later.
10 years of conversions vs withdrawal at a 32% bracket
Material six-figure saving. The ladder is doing real work, the cost is the five-year wait on each tranche, so build it before you need the cashflow.
2025 federal brackets and standard deduction embedded. State taxes not modelled, converting while resident in a no-tax state can compound the saving. Illustrative figures only; consult a CPA for the actual ladder timing.
Worth combines the Roth ladder with your 401(k), HSA and taxable buckets to design the whole withdrawal sequence. Join the waitlist.
Brackets. A $500k conversion in a single year drags taxable income into the 32-35% range. Spreading $50k a year over 10 years keeps each conversion in the 12-22% band. The bracket arbitrage is the whole point of the ladder.
Each Roth conversion has its own 5-year clock before the converted principal can be withdrawn tax-free and penalty-free. Convert in year one, withdraw that tranche in year six. Stack the conversions and you get a rolling annual income stream from age 50 to 59½.
Conversions are taxed federal plus state. If you can time the conversion years to coincide with residence in a no-tax state, the saving compounds. Be careful with state residency rules during the move year, most states want a full tax year of residence before they'll release you.