Which Retirement Accounts Should You Withdraw From First?

Retirement advice often offers a simple sequence: spend cash and taxable investments first, use Traditional retirement accounts next, and save Roth money for last.

That order can be reasonable. It is not a rule.

Withdrawing only from taxable accounts during the first decade of retirement may produce a pleasantly small tax bill today while allowing a large pre-tax 401(k) or IRA to keep growing. Later, required minimum distributions can force taxable income out of those accounts whether you need the money or not.

The better question is not “Which account comes first?” It is “Which combination of accounts creates the most useful after-tax income this year without making future years unnecessarily difficult?”

Start With the Four Main Tax Buckets

Before choosing a withdrawal sequence, divide your retirement assets by tax treatment.

The purpose of tax diversification is not to make one bucket universally superior. It gives you choices.

If all retirement assets are pre-tax, almost every portfolio dollar used for spending can increase taxable income. If you also have taxable and Roth assets, you may be able to choose where the next dollar comes from based on that year’s tax situation.

This flexibility becomes particularly useful when income changes as Social Security begins, pensions start, RMDs arrive, a spouse dies, or a large one-time expense occurs.

The Traditional “Taxable First, Roth Last” Order

A common baseline strategy looks like this:

1. spend cash needed for normal bills;
2. sell from taxable investment accounts;
3. withdraw from Traditional IRAs and pre-tax workplace plans; and
4. use Roth assets last.

The logic is understandable.

Using taxable assets first allows pre-tax retirement accounts to continue growing tax-deferred and Roth money to continue growing potentially tax-free. Roth IRAs also have no lifetime RMD for the original owner under current federal rules.

But maximizing tax deferral for as long as possible is not automatically the same as minimizing lifetime tax.

The example does not prove that early Traditional withdrawals are always better. It shows why “defer tax as long as possible” needs to be tested against future income, not accepted automatically.

Take Required Minimum Distributions Before Optional Withdrawals

Once RMD rules apply, they create a minimum amount that must leave many pre-tax retirement accounts each year.

Under current federal rules, RMDs generally begin at age 73, with the applicable starting age scheduled to rise to 75 beginning in 2033. Roth IRAs and designated Roth accounts do not require lifetime RMDs from the original owner under current rules.

If you need $70,000 from the portfolio this year and have a $28,000 RMD, the RMD is part of the $70,000 funding plan. Do not take $70,000 from other accounts and then discover in December that another $28,000 must still be distributed.

An RMD can exceed your spending need. In that case, you still must distribute the required amount, but you do not have to spend all of the after-tax proceeds. Money not needed for current consumption can generally be saved or reinvested in a taxable account.

Our RMD guide covers the calculation, deadlines, aggregation rules, and missed-distribution consequences in detail.

Taxable Accounts Can Be Useful First—But Watch the Cost Basis

A withdrawal from a taxable brokerage account is not taxed the same way as a Traditional IRA distribution.

When you sell an investment, the taxable gain or loss generally depends on the difference between the sale proceeds and adjusted cost basis. The entire amount transferred to checking is not necessarily taxable income.

This can make taxable assets attractive for retirement spending, especially when the portfolio contains high-basis investments that can be sold with relatively little realized gain.

But do not automatically sell whatever has the smallest gain.

Also consider:

• short-term versus long-term holding period;
• capital losses available to offset gains;
• portfolio diversification;
• whether selling creates an unwanted concentration elsewhere;
• qualified dividends and interest already adding to taxable income;
• future tax planning; and
• estate goals.

IRS applies different tax rules to net capital gains depending on taxable income and the type of gain. Some taxpayers can have long-term capital gains taxed at 0%, while higher income can produce higher applicable rates and potentially the 3.8% Net Investment Income Tax.

That means a low-income retirement year can create an opportunity to realize gains deliberately rather than merely spending whatever investment happens to be easiest to sell.

Strategic Pre-Tax Withdrawals Can Fill Low Tax Brackets

The years immediately after retirement can create an unusual tax window.

Wages have stopped, but Social Security may not have started. RMDs may still be years away. The household could therefore have much less ordinary taxable income than it had while working or will have later in retirement.

Instead of withdrawing exclusively from taxable assets, you can evaluate taking some money from a Traditional IRA or 401(k) deliberately.

The idea is to use tax capacity you are comfortable paying for today rather than preserving every pre-tax dollar for a potentially higher-income future year.

This is not an instruction to “fill a tax bracket” mechanically. The optimal amount can be affected by:

• capital gains;
• Social Security taxation;
• Affordable Care Act Marketplace premium assistance before Medicare;
• Medicare IRMAA after Medicare enrollment;
• state taxes;
• deductions and credits;
• Roth-conversion goals; and
• other household income.

Tax planning should therefore model the full return rather than looking only at the marginal federal bracket on one IRA withdrawal.

Roth Conversions Compete With Spending for the Same Tax Capacity

A low-income retirement year can also be used for a Roth conversion.

A conversion generally moves pre-tax Traditional IRA money into a Roth IRA. Previously untaxed amounts converted are generally included in gross income for the conversion year.

The purpose is different from an ordinary spending withdrawal:

• a spending withdrawal leaves the retirement system and funds your lifestyle;
• a Roth conversion moves money from a pre-tax retirement account to a Roth account without using the converted amount for spending.

Both can increase taxable income.

Decide how much tax capacity belongs to spending withdrawals and how much, if any, belongs to conversions.

A Roth conversion can reduce future pre-tax balances and potential RMDs, but it creates a current tax bill and can affect other income-based calculations. Conversions are also generally irreversible under current federal rules.

This is one reason withdrawal sequencing and Roth-conversion planning should be done together rather than as separate exercises.

Roth Withdrawals Can Control Taxable Income in High-Spending Years

Qualified Roth withdrawals can provide spending without increasing federal taxable income in the same way as a Traditional IRA distribution.

That can make Roth useful when you need extra cash but do not want to add substantial ordinary income.

Potential situations include:

• a large home repair;
• a vehicle purchase;
• an unusually expensive travel year;
• helping family;
• a year with a large capital gain;
• a year when taxable income is already elevated by an RMD; or
• a year in which additional income could increase Medicare premiums.

This does not mean Roth should always be spent whenever taxes are high.

Roth assets also provide future flexibility, potential tax-free growth, no lifetime RMD for the original Roth IRA owner, and possible estate-planning advantages depending on beneficiary circumstances. Using Roth money today means giving up those future options.

Think of Roth as a tax-management reserve, not merely “the account that always comes last.”

Watch Social Security and Medicare When You Add Taxable Income

Withdrawal decisions can affect costs outside the retirement account itself.

Social Security Taxation

IRS states that Social Security benefits can become federally taxable based on a calculation involving one-half of benefits plus other income, including tax-exempt interest.

Additional Traditional IRA withdrawals, pension income, interest, dividends, or realized gains can therefore affect the portion of Social Security included in taxable income.

Up to 85% of Social Security benefits can be included in taxable income under federal rules when the applicable thresholds are reached. This does not mean Social Security is taxed at an 85% rate.

Medicare IRMAA

Higher income can also increase Medicare Part B and Part D costs through the Income-Related Monthly Adjustment Amount, or IRMAA.

Medicare generally uses modified adjusted gross income from the federal tax return two years earlier to determine whether IRMAA applies.

For 2026, Medicare states that IRMAA can apply when 2024 modified adjusted gross income exceeded $109,000 for an individual filer or $218,000 for married filing jointly.

The thresholds and premiums can change annually, so use the current Medicare figures for the year being planned.

SSA provides a process to request a lower IRMAA after certain life-changing events, such as retirement-related loss of income, but eligibility and documentation requirements apply. Do not assume every high-income year can be appealed away.

Couples Need a Survivor Withdrawal Plan Too

A strategy that works efficiently while married can become less efficient after the first spouse dies.

The survivor may face:

• one Social Security benefit instead of two;
• a smaller or discontinued pension depending on the survivor election;
• single tax-filing brackets rather than married-filing-jointly brackets;
• similar housing and household fixed costs;
• the same inherited retirement assets; and
• potential RMDs from large pre-tax balances.

This can create a situation in which the surviving spouse has less household income but a higher marginal tax burden on the same level of retirement-account withdrawals.

That possibility can strengthen the case for using some pre-tax money or converting some of it during earlier married years—but only if the current tax cost is acceptable.

Do not optimize withdrawals solely for the tax return of the healthier or older spouse. Test what the account balances and income look like after either spouse dies first.

A Practical Withdrawal Order to Review Each Year

Instead of setting one permanent account order on retirement day, use an annual decision sequence.

1. Calculate the after-tax spending need. Start with the retirement budget, not the account balance.
2. Add dependable income. Include Social Security, pensions, and other recurring income.
3. Satisfy RMDs. Count required distributions toward the spending need before taking optional withdrawals.
4. Use available cash for normal bill timing. Do not sell investments for every small expense.
5. Review taxable-account sales. Choose lots with attention to cost basis, gains, losses, and portfolio allocation.
6. Estimate this year’s ordinary taxable income. Include pensions, RMDs, interest, wages, and other income already expected.
7. Decide whether additional pre-tax withdrawals are useful. Low-income years may justify taking more than the immediate spending need.
8. Decide whether Roth-conversion room exists. Coordinate conversions with spending withdrawals rather than double-counting tax capacity.
9. Use Roth strategically. Consider Roth for unusually high-spending or high-tax years when preserving taxable-income flexibility has value.
10. Check Social Security, Medicare, and state-tax effects.
11. Review future RMDs and the survivor scenario.
12. Repeat next year. Account balances, tax law, spending, and income will change.

The table is a set of prompts, not a tax prescription.

The Retirement Income Calculator can help determine how much the portfolio must provide. If a 401(k) is a major funding source, the 401(k) Withdrawal Calculator can test how long that balance may last. Withdrawal sequencing then answers the next question: which accounts should provide those dollars this year?

A good strategy can deliberately use more than one account in the same year. The broader retirement-income plan does not need to come from a single bucket simply because that makes the plan easier to describe.