The Roth Conversion Ladder: One Plan, $180,412 Less Tax
A Roth conversion ladder built year by year for a sample plan — one strategy, $180,412 less lifetime tax.
Numbers shown are from a sample plan, for illustration only — not financial advice.
What you'll see
This demo builds a Roth conversion ladder for a sample plan and totals the payoff: $180,412 of lifetime tax saved and roughly $3.22M more after-tax wealth at age 90 ($121.56M versus $118.34M) versus doing no conversions at all. The chart shows the tax-deferred balance draining as the Roth balance fills — by 90, $11.0M sits tax-free in Roth against $7.58M still owing the IRS in the no-conversion case.
A year-by-year ladder table walks four sample years — 47, 52, 65, and 73 — showing exactly how much was converted, the tax paid on it, and the resulting Trad/Roth split; by 73, required minimum distributions have shrunk to nearly nothing. Switching the fill strategy from "Fill to 12%" to "Fill to 22%" reshapes the whole ladder, and running the built-in optimizer checks five strategies across 27 possible start years against IRMAA tiers, the ACA cliff, and liquidity limits — settling on "Fill to 12%" as the best fit here.
The demo also flags the mechanic that trips people up: a five-year seasoning rule, where each converted dollar is locked before it can be withdrawn tax- and penalty-free.
Chapters
- 0:00One ladder. $180,412 less tax — the Roth conversion ladder opens on a sample plan.
- 0:07Pay tax at a known bracket now — dodge the unknown one later.
- 0:22$11.0M tax-free — versus $7.58M still owing the IRS.
- 0:35Pick a bracket to fill — the whole ladder reschedules.
- 0:41The optimizer prices IRMAA, the ACA cliff, and the 5-year rule.
Why it matters
- Runs the conversion math against IRMAA tiers and the ACA cliff simultaneously, not tax brackets alone.
- Times conversions around the five-year seasoning rule so converted dollars are usable when you actually need them.
- Includes a built-in optimizer that checks multiple fill strategies across many start years automatically.
- Shows the RMD payoff directly — how much smaller future required distributions become because of conversions made now.
FAQ
Why convert instead of just leaving money in a traditional account?
Converting pays tax now at a bracket you can see, instead of an unknown future bracket — and it shrinks the required minimum distributions that would otherwise force taxable withdrawals later.
What is the five-year seasoning rule?
Each converted amount must season for five tax years before it can be withdrawn tax- and penalty-free. The ladder times conversions so seasoned dollars are available when they're actually needed.
How does the optimizer pick a strategy?
It runs multiple fill strategies against many possible start years and scores them against IRMAA tiers, the ACA cliff, and liquidity constraints, then reports the best-performing combination.