Roth conversion ladder

A Roth conversion ladder is a multi-year plan to convert Traditional IRA (or 401(k)) balances to Roth IRA, year by year, filling lower tax brackets before required minimum distributions (RMDs) at age 73 force the issue.

The math

Traditional IRA balances grow tax-deferred but get taxed at withdrawal — including forced withdrawals (RMDs) starting at age 73. RMDs in the 70s and 80s often push retirees into higher brackets than their working years, especially if income from pensions, Social Security, and other sources is already substantial.

Converting in lower-income years (gap years between work and Social Security, sabbaticals, semi-retirement) pre-pays tax at a lower rate, locks gains into the tax-free Roth, and reduces future RMDs.

Optimization levers

• Bracket-fill: convert just enough each year to top off the 22% bracket (or 24%, depending on aggressiveness)
• NIIT avoidance: cap conversions to stay below the 3.8% NIIT thresholds ($200K single, $250K MFJ)
• IRMAA avoidance: cap below Medicare premium surcharge thresholds (~$106K MAGI single, ~$212K MFJ in 2026)
• Pay conversion tax from outside accounts: avoid using IRA dollars to pay the tax — your post-conversion Roth balance is larger

When to start

Most analyses favor starting conversions in the year of retirement (when income drops) and continuing through age 72. Earlier starts work for clients with intentional low-income years (job change, sabbatical).

Estate planning bonus

Inherited Traditional IRAs are taxed at the heir's marginal rate over a 10-year window (post-SECURE Act). Inherited Roths are tax-free. Roth conversions during life are often the single most impactful estate-planning move for IRA-heavy households.