I know that, traditionally, people talk about setting up a Roth IRA conversion ladder 5 years before retirement. Is there any reason for waiting until that to get those funds in place? If the money needs to sit in the Roth for at least 5 years before withdrawal, is there any harm in starting that 5-year clock sooner rather than later?
I recently changed jobs and have about $7k in my previous employer's 401k. (I was there less than a year!) I'll be moving that money over to Vanguard, where I keep the rest of my investments, for simplicity's sake. I've rolled previous 401k funds into a Vanguard Rollover IRA... is there any reason NOT to roll this $7k into my Roth IRA, instead of a Rollover IRA? And, while we're at it, is there any reason not to also start converting small amounts of my Rollover IRA funds to Roth, to spread out the taxes instead of waiting for that 5-year-pre-FIRE mark?
I suspect there might be a reason that people wait until 5 years out, but I can't find anything that explains why.