In this video, learn how to get money out of pre-tax retirement accounts before age 59.5–and without penalty–with Roth IRA conversions. Roth IRA conversions and a Roth IRA Conversion ladder can help you succeed in early retirement through tax efficiency. If your early retirement income is low enough, you can even access your retirement funds tax free! If you have a large balance in a 401k or traditional IRA and want to access that money early, this video is for you.

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0:00 Disclaimer
0:07 Introduction
0:26 Traditional vs Roth IRA
2:52 Why Early Retirees are Different
3:10 Roth Conversion
4:57 Roth Conversion Ladder
5:40 Example and Roth Conversion Math
8:16 Summary
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Disclaimer: This video is for informational and entertainment purposes only. Please consult a tax professional before making any tax moves….(read more)

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Retirement is a milestone that many of us look forward to, but not everyone wants to wait until age 65 to access their retirement funds. Fortunately, there is a way to access retirement funds early through a Roth IRA conversion ladder.

A Roth IRA conversion ladder is a strategy that involves converting traditional IRA funds into a Roth IRA over a period of several years, allowing you to access your retirement funds without penalty before age 59 ½. This strategy can be ideal for those who want to access their retirement funds early or who want to lower their tax liability during retirement.

Here is a step-by-step guide on how to create a Roth IRA conversion ladder:

Step 1: Start with a Traditional IRA
The first step is to have money in a traditional IRA account. This account will serve as the basis for the conversion ladder. Make sure that the account has enough money to fund your retirement for the next few years.

Step 2: Convert to a Roth IRA
Once you have money in your traditional IRA account, you can begin the conversion process. Choose a portion of your IRA to convert to a Roth IRA each year. Converting too much can result in a higher tax bill, so it’s important to be strategic.

Step 3: Wait Five Years
Once you have converted your IRA funds to a Roth IRA, you must wait five years before you can withdraw the money penalty-free. Therefore, it’s important to start the conversion process early so that you can access your retirement funds when you need them.

Step 4: Access Your Funds
After the five-year waiting period, you can begin accessing your Roth IRA funds penalty-free. You can withdraw your contributions at any time, and your earnings will be tax-free after age 59 ½.

A Roth IRA conversion ladder can be a great way to access your retirement funds early, but it’s important to understand the tax implications. Converting to a Roth IRA can result in a higher tax bill in the short term, but it can also lower your tax liability during retirement.

Overall, a Roth IRA conversion ladder can be a smart strategy for those who want to retire early or who want to manage their tax liability during retirement. It’s important to consult with a financial advisor to determine if this strategy is best for your individual financial goals.