How the Backdoor Roth IRA Works
A strategic workaround for high-income earners, powered by Altruist.
Task Reminder
Contribute
Wait (Briefly)
Convert
Grow Tax-Free
Task Reminder
At Iconoclastic, we don't rely on memory or luck for timing — we use RightCapital task reminders to nudge clients automatically when it's time to fund and convert. Because financial discipline shouldn't depend on calendar math.
Contribute
Start each year strong. On January 2, drop your $7,000 (2025 limit) non-deductible contribution straight into your Traditional IRA. Doing it right after New Year's gives your money a full extra year of tax-free growth once it's converted to a Roth.
Wait (Briefly)
Let the contribution clear for a few days — just enough to stay clean in the IRS's eyes.
Convert
Move funds from Traditional IRA → Roth IRA and pay tax only on any earnings from the short holding period. Altruist's modern custodian platform makes this quick and transparent, minimizing administrative lag.
Grow Tax-Free
Now you've got compounding in its purest form: no taxes, no required minimum distributions, no nonsense. Over time, this early-January rhythm adds meaningful tax-free growth — one small behavioral edge that quietly snowballs.
2025
2026
Projection2026 figures are projections only and not yet official
For those over the Roth IRA income limit who still want in.
Our Custodian of Choice
Altruist provides modern technology and transparent pricing for better custodial services for your retirement accounts
Early Retirement Strategy: The Roth Conversion Ladder
A roadmap for retiring early, delivered through the custodian built for modern RIAs.
How It Works
Follow these four steps to access your retirement money early
Roll Over to Traditional IRA
When you leave your job, roll your 401(k) or 403(b) into a Traditional IRA. Altruist simplifies everything RIAs need — onboarding, funding, trading, portfolio management, billing and reporting — so this transition is seamless and cost-effective.
Convert to Roth IRA
Each year, convert the amount you'll need in five years from your Traditional IRA to a Roth IRA. Time conversions to low-income years so taxes are minimized. Altruist's modern technology and lower fees help you keep more of your money working for you.
Wait Five Years
Every conversion has a five-year seasoning period before you can withdraw it. While you wait, keep building the ladder. Altruist's secure, scalable platform protects your assets and gives you more time by automating administrative tasks.
Withdraw Tax-Free
After five years, withdraw each converted amount tax- and penalty-free. Because Altruist only works with RIAs who have a fiduciary duty, the focus stays on delivering better client outcomes — more growth, lower costs, more freedom.
Five-Year Timeline
| Year | Action | Result |
|---|---|---|
| 1–5 | Convert $10,000 annually | Each conversion starts a five-year timer |
| 6+ | Withdraw $10,000 per year | Continue conversions to keep the ladder moving |
Pros
- Time conversions during low-tax years and potentially pay no tax on the amount converted
- Build a tax-free income stream before 59½
- Stretch your money 15+ extra years compared to taxable accounts
Cons
- Every conversion requires a five-year wait
- Taxes are prepaid, so there's less short-term compounding
- This is a deliberate, multi-year plan rather than a quick-cash strategy
Strategy Comparison
| Strategy | Final Balance at Age 60 | Money Lasts Until |
|---|---|---|
| Taxable Account | $469,799 | Age 76 |
| Traditional (Penalty) | $672,827 | Age 86 |
| Roth Conversion Ladder | $691,465 | Age 90 |
| SEPP 72(t) | $706,892 | Age 90 |
| Roth 401(k) | $504,620 | Age 79 |
(Assumes a 30-year-old retiring at 40, needing $9,000/year from 45–60, with $18,000 annual contributions.)
Key Takeaway
The Roth Conversion Ladder isn't just a loophole, it's a blueprint for financial independence using lower fees and more time to stretch your hard earned dollars as far as they can possibly go.