Retirement's drawing nearer, and you might be starting to think about what your financial picture is going to look like once you start living off your savings. And that could cause you to look at your retirement accounts in a new light.

Retirement savings of any type are great to have, but Roth accounts give you the freedom to make tax-free withdrawals, so you have more control over your tax bill. But it's probably not in your best interest to do a large Roth IRA conversion in 2026. Here's why and what to do instead.

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The problem with a large Roth IRA conversion

The annual contribution limits for Roth IRAs don't apply to conversions. You can technically convert as much as you want in a single year. But you have to pay taxes on the converted amount that year, and that's why you need to be careful about how you handle your Roth IRA conversions.

Say you have $50,000 you want to convert. If you do this all at once, the IRS will treat you as though you earned $50,000 more than you actually did in 2026. You could jump up to another tax bracket, and your tax bill could increase by thousands of dollars. And you won't have access to the converted funds to help you pay that tax bill.

That could leave you in a bind, where you owe the IRS and have to either set up a payment plan or face costly tax penalties. But there's a way to avoid this.

How a Roth IRA conversion ladder could help you

A Roth IRA conversion ladder is where you break up a large Roth IRA conversion over several years. This lets you better control how much your tax bill increases in any given year. You can convert just enough to take you to the top of your tax bracket this year and then convert more the next year.

If you're within a few years of retirement, you might choose to convert the amount you expect to spend in your first year of retirement now. There's a five-year rule that says you must wait five years, starting on Jan. 1 of the year the conversion took place, before you can withdraw that money tax- and penalty-free. For example, if you do a Roth IRA conversion today, you'd have penalty-free access to it on Jan. 1, 2031.

Start your Roth IRA ladder at least five years in advance of when you plan to retire. This is especially important if you plan to retire before age 59 1/2, when the early withdrawal penalty on retirement savings disappears. That way, you're free to start tapping your savings when you need them, and you won't have to worry about huge retirement tax bills, either.