• A Roth conversion ladder is a multiyear strategy to transfer pretax funds to a Roth IRA to kickstart future tax-free growth.
• You'll owe upfront levies on the converted balance, but there is no 10% early withdrawal penalty after five years.
• However, tapping the conversions after only five years could forgo future tax-free growth.

Roth individual retirement account conversions are a popular way to reduce future levies on pretax 401(k) or IRA withdrawals — and you can smooth out the upfront tax hit with a "Roth conversion ladder," experts say.

Roth conversions transfer pretax or nondeductible IRA money to a Roth IRA, which offers future tax-free growth. The trade-off is regular income taxes incurred that year on the converted balance.

By comparison, a Roth conversion ladder is a series of conversions over multiple years, meaning "you're paying taxes in smaller increments," said certified financial planner Preston Cherry, founder and president of Concurrent Financial Planning in Green Bay, Wisconsin.

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Roth conversion ladders are a "strategic and tactical approach" involving years of tax projections, including future withdrawals, said Ashton Lawrence, CFP and director at Mariner Wealth Advisors in Greenville, South Carolina.

For example, rather than converting $200,000 from pretax to Roth in a single year, you may break that into chunks over several years, depending on your income. Of course, boosting your adjusted gross income any year can trigger other tax consequences, such as phaseouts for certain tax breaks.

"It's not a one-time planning engagement" because you need to revisit the planned conversions every year and adjust as needed, Lawrence said.

'Unlock' your retirement funds early

Similar to regular Roth conversions, one of the key benefits of the conversion ladder is tax-free "compounded growth on future gains," said Cherry, who is a member of CNBC's Financial Advisor Council.

But the strategy is also popular for early retirees who want to tap retirement funds before age 59½ without penalty, he said.

Although you can access Roth IRA contributions anytime, there's generally a 10% early withdrawal penalty on earnings before age 59½, with some exceptions.

However, you can tap Roth conversions without the 10% penalty or taxes after five years to "unlock some of your money early," Cherry said. But a separate five-year period applies to each conversion.

There's also a five-year aging rule for Roth IRA accounts, which requires the account to be open for at least that long to avoid taxes or penalties, even after age 59½.

While tapping your converted IRA balance after five years could be appealing for early retirees under age 59½, you will forgo future tax-free growth, Lawrence said.

Typically, more time for compound growth makes Roth conversions more beneficial, and you'll want to make sure you break even on the upfront taxes before tapping the account, he said.