In this crossover episode, Rob Moore, MQFP® joins the Military Money Manual to explain how a Roth conversion ladder can create supplemental income between military retirement and age 59½.

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• Email The Fiscal Foxhole at fiscalfoxhole@gmail.com
• Book a meeting with Rob
• Book a meeting with Omen

🪜 Roth Conversion Ladder Basics

• A Roth conversion ladder moves money from a traditional IRA to a Roth IRA over several years, creating potential bridge income before age 59½.
• The converted amount becomes taxable income in the year of conversion, but the conversion itself does not trigger an early-withdrawal penalty.
• Taxes should be paid with money outside the converted balance.

⏱️ Contributions, Conversions, and the Five-Year Rule

• Roth IRA contributions can generally be withdrawn tax- and penalty-free at any time, although investment gains remain subject to separate rules.
• Each annual Roth conversion receives its own five-year waiting period, beginning January 1 of the conversion year.

🎖️ Military Planning Considerations

• The ladder discussed here operates within traditional and Roth IRAs, not directly inside the TSP.
• Starting conversions while still serving may mean recognizing additional income during peak earning years.
• Estimate the annual retirement-income gap first, then evaluate whether projected conversions, taxes, and timing realistically support it.
• Consult a qualified tax professional before executing the strategy.

🔀 Alternatives for Early-Retirement Income

• Rule 72(t)/SEPP: Provides early access but imposes a rigid withdrawal schedule.
• Rule of 55: May allow penalty-free TSP access when separation occurs during or after the year the participant turns 55.
• Taxable brokerage account: Offers flexibility over contribution amounts, withdrawals, and tax management without retirement-account age restrictions.

📊 Flexibility Can Be a Tax Advantage

Rob Moore’s illustrative retiring O-5 analysis found that a brokerage-based bridge produced roughly $13,000 less aggregate tax than the Roth conversion approach after accounting for the original traditional-account deduction. The broader lesson is to compare lifetime taxes, access rules, and optionality instead of assuming “taxable” automatically means tax-inefficient.

🔗 Links and Resources

• How Tax-Advantaged Is Tax-Deferred?
• Check out the Military Money Manual.
• The Fiscal Foxhole and Everman financial education resources