Clear Money Guide
What this guide covers
A quick view of the questions and evidence developed below.
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Updated July 28, 2026. Quick answer: Convert roughly one year of expenses each year. Each conversion becomes accessible without the 10% penalty five years later — so a ladder started at 45 begins paying out at 50 and runs until 59½, when the penalty stops mattering.
How the ladder works
Each conversion starts its own five-year clock. Convert in year 1 and that tranche is available penalty-free in year 6; convert again in year 2 and it opens in year 7. Repeat and you build a rolling stream.
| Convert in | Penalty-free from |
|---|---|
| Year 1 | Year 6 |
| Year 2 | Year 7 |
| Year 5 | Year 10 |
The five-year gap you must bridge
Nothing comes out for the first five years. You need a taxable account, cash, or other income to live on during that bridge — the ladder does not solve the first five years of early retirement, only everything after. Planning it late is the most common failure.
Why the conversions themselves are cheap
An early retiree with little other income converts into the widest, lowest brackets available. The ladder and low-bracket conversion are usually the same action — but watch the marketplace subsidy, which often binds before the bracket does.
See also the two five-year rules — the ladder runs on the conversion clock, not the earnings clock.
Price the conversion before you make it
A conversion cannot be undone once it is done, so it is worth having someone model the bracket it fills, the knock-on effects on your other income and how long the money has to compound before you settle on an amount.
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Sources
IRC §408A (Roth IRAs); IRC §408A(d)(3) (conversions); IRC §1411 (net investment income tax); IRC §86 (taxation of Social Security benefits); IRC §6654 (estimated tax); Tax Cuts and Jobs Act (2017) §13611 (repeal of conversion recharacterisation). Cross-checked July 2026 against professional analyses. Indexed thresholds are described rather than asserted, because they change annually.
This states what the cited authority says. It is not tax advice, and a conversion interacts with the rest of your return in ways one page cannot see.
Related
A ladder is a series of separately sized conversions, and each rung is a bracket decision of its own. The Roth conversion bracket calculator takes the income you expect in a given year and returns that year’s bracket room and what filling it would cost, so a rung can be set to roughly a year of expenses and then checked against the bracket before it is committed.