Roth Conversion Ladder — seasoning queue + bridge cold-start gate
Every ladder calculator can queue conversions for five years. Almost none ask the question that actually sinks early retirees: does the bridge fund survive the cold start? This one runs your first five years across every historical start sequence since 1928 (a 2000- or 2008-style sequence, not a smooth 6%), grosses up the real cost of paying conversion tax from IRA withholding before 59½, and shows the §72(t) SEPP lane next to it — with every output as a range.
Total conversion cost range
tax + penalties, p5 · median · p95Coral = 5th percentile, green = median, lime = 95th percentile of total tax + penalties across all start sequences. The indigo band is the tax-only share — daylight between band and whiskers is penalties (withholding and/or emergency early-IRA taps).
§72(t) substantially equal periodic payments are the main alternative to a ladder: penalty-free ordinary-income withdrawals that start immediately — but the schedule locks for the longer of 5 years or until 59½, and breaking it triggers the 10% additional tax retroactively with interest.
Year-by-year accessible-money timeline ›
| Plan year | Convert (plan $) | Rung unlocking (plan $) | Accessible Roth pool (median, real) | Bridge balance p5 / median / p95 (real) |
|---|---|---|---|---|
| Run the ladder to fill the timeline. | ||||
"Rung unlocking" is the plan-dollar principal whose 5-taxable-year clock (started Jan 1 of its conversion year) expires that year. The accessible-pool column is the median REAL value across start sequences — seasoned principal is frozen in nominal dollars while it waits, so realized inflation eats at it; that decay is modeled, not ignored.
Show the math ›
Assumptions & sources ›
| Assumption | Value | Source · asOf |
|---|---|---|
| Ordinary brackets + standard deduction | 2026, single / MFJ | IRS Rev. Proc. 2025-32 (OBBBA-amended) · asOf 2025-10 · future brackets assumed CPI-indexed, so the sim runs in real dollars |
| Per-rung seasoning | 5 taxable years, clock starts Jan 1 | IRC §408A(d)(3)(F); Treas. Reg. §1.408A-6 Q&A-5 · a December conversion is accessible after ~4 yrs + 1 day |
| Early-distribution additional tax | 10% before 59½ | IRC §72(t)(1) · applied to withheld conversion tax and to emergency IRA taps |
| §72(t) SEPP band | RMD method … amortization @ 5% | IRS Notice 2022-6 (rate ≤ max(5%, 1.2× mid-term AFR)); Single Life Table, Treas. Reg. §1.401(a)(9)-9(b) · asOf 2022-01 |
| Market series (bridge + IRA) | S&P 500 TR / 3-mo T-bill, 1928–2025 | Damodaran (NYU Stern) · asOf 2026-01 · rolling windows, real returns via CPI-U (BLS) |
| Not modeled (disclosed) | state tax · ACA subsidy cliff · IRMAA · LTCG on bridge sales · Roth earnings spending | conversions raise MAGI, which can cut ACA premium subsidies sharply — check that constraint before sizing rungs; bridge withdrawals are treated as basis (slightly optimistic); locked Roth earnings are never spent (conservative) |
The simulation runs in real (today's) dollars: spending and conversions hold constant purchasing power, brackets are assumed to index with CPI (as they do by statute), and each historical window supplies its own realized real returns and inflation. Estimates for planning illustration — not tax, legal, or investment advice.
Common questions
What is a Roth conversion ladder? ›
A Roth conversion ladder moves money from a traditional IRA or pre-tax 401(k) into a Roth account in yearly slices called rungs. Each converted amount is taxed as ordinary income in the conversion year, then waits out a 5-taxable-year seasoning clock before its principal can be withdrawn penalty-free. This calculator queues those rungs, taxes them at the 2026 brackets, and shows the year each rung unlocks.
How does the 5-year rule work for Roth conversions? ›
Each conversion carries its own 5-taxable-year clock that starts on January 1 of the year the conversion happens, per Treasury Regulation 1.408A-6. Because the clock counts taxable years rather than 60 months, a December conversion can become accessible after roughly four years and one day. This page tracks a separate seasoning queue per rung, so principal from an earlier conversion unlocks before principal from later ones.
What is the cold-start risk for a Roth conversion ladder bridge fund? ›
The cold start is the risk that your first retirement years hit a poor market sequence, like a 2000- or 2008-style stretch, while the bridge fund carries all spending before any rung unlocks. This calculator runs those first years across every historical start sequence since 1928 instead of a smooth 6 percent return, then returns a Pass or Fail on whether the bridge survives, with the balance shown as a p5-to-p95 range.
How do you pay the taxes on a Roth conversion before age 59 and a half? ›
The calculator models two funding sources. Paying from bridge cash keeps the full conversion inside the Roth. Paying through IRA withholding before 59 and a half is itself an early distribution, so the withheld slice is taxed and also takes the 10 percent additional tax under IRC 72(t) and never reaches the Roth. A 72(t) SEPP lane is shown as an alternative that withdraws penalty-free but locks its schedule until the longer of 5 years or age 59 and a half.
Related
- Guide: the 5-year rule
Why every rung has its own clock, and why December beats January.
- Safe withdrawal rate
Three withdrawal strategies stress-tested over the same 1928–2025 windows.
- How long will my money last
Depletion horizons as ranges, not single points.