“Isn’t a Roth conversion ladder far superior to an SEPP in every way?”

“You wrote all of this stuff about SEPPs but it is a complete waste of time, everyone should just do a Roth conversion ladder.”

“Thanks for the SEPP Calculator but isn’t a Roth conversion ladder more flexible?”

All good questions / comments, of course. The Roth conversion ladder is a great option to access retirement accounts before age 59.5. But some people will still find that the SEPP is better suited to their wants / needs.

Me, for example.

Roth Conversion Ladder vs SEPP, Which is Better?

The Roth conversion ladder and SEPP are two options for accessing retirement account funds before age 59.5.

The Internet has largely decided that between the two, the Roth conversion ladder is the right choice. And it is a good choice, certainly.

Unless of course you don’t have (or don’t want to tap) 5 years’ worth of expenses in easily accessible form.

Let’s explore.

Roth conversion ladder option

I turn 50 this year (2024.)

If I want to spend $29,200 per year (the 2024 standard deduction for MFJ) from retirement accounts starting as soon as possible, I can do a Roth conversion of that amount in 2024. After the conversion has seasoned for 5 years (2029), I can make a tax-free / penalty free withdrawal to spend as I wish.

I just do this every year for the next 5 years to get me to age 59.5.

Now I just need sufficient funds to get through the first 5-year seasoning, or $29,200 * 5 = $146,000.

If you have the $150k in taxable accounts, this is easy and obvious, right?


I haven’t had a paycheck in over 12 years now and have been living pretty well that entire time, which means my taxable account hasn’t had any recent additions.

Here is a stock purchase I made back in 2008

Clearly I have the $150k available, but for better or worse those funds have grown quite a bit (from ~$200k to ~$800k)

If I sell $29,200 worth of these shares to fund current expenses I will realize a capital gain of ~$22,000 (details in the post: Long Term Long-Term Capital Gains.) Adding this to the $29,200 annual Roth conversion will throw a bit of a wrench into our low-tax lifestyle.


SEPP option

What if I can skip the whole 5-year seasoning period and go straight to spending funds directly from my retirement accounts?

SEPP to the rescue.

Simply by agreeing to withdraw an equal amount each year (e.g. $29,200) I can pull funds directly from retirement account with no seasoning period, allowing me to leave the shares in my taxable account untouched.

Since I have no plans to commit at least 40 hours a week to earning money for someone else and I am reasonably close to age 59.5, obligating myself to annual withdrawals for the next few years seems a reasonable risk.

What happens to taxable account long term?

If I don’t sell shares to live today, and selling them at any time will result in a large realized gain, do I just… hold them forever?

Yes, that’s right.

When their parents die our kids will get those shares, but with stepped-up basis.

One of the weirdest parts of the US tax code is that all assets get stepped up in basis upon death, meaning if my 2008 stock purchase grows to $10 million… our kids can sell that $10 million worth of shares with $0 in taxable gains.

Point being – once shares grow significantly, the incentives are to never sell… which is why the uber rich will often borrow against assets instead (see: Sweet, Sweet, Debt.)

Multi-Generational Tax Minimization

My Actual Plan

My actual plan is still a bit in flux… I have another year or two of high(er)-basis stock I can tap. I may be able to make some very small capital gain harvests (even $1,000 helps) to delay things a bit… but some time in the next year or three or five I will (highly) likely start an SEPP with a withdrawal designed to fill the standard deduction / 0% tax space.

Should I find during my annual December tax review that we still have some (small) opportunity for zero or low tax Roth conversions, those can be done in addition.

Hopefully that is caveated enough ;)


The Internet has largely decided that a Roth conversion ladder is the one and only approved way to enable early withdrawal from retirement accounts.

The Internet can make its own retirement plans, but we will likely start an SEPP in the next few years. What is the difference really between starting withdrawals at 59.5 vs 54.5?

This will allow immediate spending from retirement accounts in a tax-friendly way, with minimal risk or obligation, meanwhile reducing the need to spend from very low basis taxable accounts.

There may be other scenarios in which an SEPP would be the better choice (vs Roth conversion ladder.) Analysis of these situations is an exercise left to the reader.

IRA Withdrawals Before Age 59.5
SEPP Calculator

Will you use an SEPP? Or is a Roth conversion ladder a better fit?