For most of your life, the hard question about money was how much to put away. You got good at it. You filled the 401(k), you left the IRA alone to grow, you trained yourself not to touch it. Then you retire, and almost overnight the question turns inside out. Now you have to take money out, and decide every month where to take it from, and it turns out no one ever taught you that part.
It matters more than it sounds like it should. The order you draw from your accounts is quietly a tax decision, and the obvious order is not always the right one.
You are really managing three piles of money
Almost everyone retires with savings split across three kinds of accounts, and the only thing that matters here is that the tax code treats them very differently.
Your taxable account, an ordinary brokerage or savings account, holds money you have already paid tax on. When you sell, you owe tax only on the gain, often at lower long-term rates, and anything still in there at your death generally passes to your heirs, under current law, with the tax on that growth reset.2 Your traditional IRA or 401(k) holds money that has never been taxed at all, so every dollar out is ordinary income, and starting at 73 the law makes you take some out whether you want to or not.1 Your Roth is the reverse of that, tax paid going in, nothing owed coming out, and no forced withdrawals for as long as you live.3
The usual advice, and why it mostly makes sense
The standard answer is to spend the taxable account first, the traditional IRA next, and save the Roth for last. The logic is sound. It lets the two sheltered accounts keep growing without a yearly tax drag, it spends the gentlest-taxed dollars first, and it preserves the Roth, the most valuable of the three, for as long as possible. As a starting point, it is hard to argue with.
Where the usual advice quietly backfires
The trouble is what it does to the IRA. If you faithfully drain the taxable account first and never touch the pre-tax balance, that balance does not sit still. It keeps growing, untouched, for years. Then at 73, rising to 75 for anyone born in 1960 or later, the law makes you start pulling it out on a schedule you do not control, taxed as ordinary income, and the penalty for simply forgetting is a stiff 25% of what you should have taken.1
Your income is taxed in layers, and the more you take out in a year, the higher the layer you reach. A balance you left alone for a decade can throw off withdrawals large enough to push you into a higher bracket than you ever paid while you were working. The same jump can pull more of your Social Security into the taxable column and raise your Medicare premiums.5 You did not avoid the tax. You mailed it to your seventy-five-year-old self, in a bigger envelope. And when one spouse later dies, the whole bill lands on a survivor who now files alone, with far less room, which is a hard enough story to have its own name, the widow's penalty.
The best chance you get, and it is easy to miss
The years between the day you stop working and the day those forced withdrawals begin are usually the lowest-income years of your adult life. Work has ended, Social Security may not have started, and nothing is being pulled out yet. For most people that quiet stretch is the widest planning window they will ever have, and making the most of it is what the rest of this piece is about.
The idea is to spend that window on purpose. You take some money out of the IRA, or convert part of it to a Roth, up to the top of a low bracket and no further. In 2026 the 12% bracket runs to about $100,000 of taxable income for a couple, so a conversion that fills it and stops is taxed at 12% now instead of 24% or more later. If your income is low enough, you can even sell investments that have grown in value and owe nothing on that growth, because for a couple with income that low the tax rate on long-held gains is zero up to about $98,900 that same year.4 None of this is about paying less tax this year. In most of these years you will choose to pay a little more. It is about paying at your lowest rate instead of your highest, measured across a whole retirement rather than a single April.
When the Roth should not wait
Because a Roth withdrawal adds nothing to your taxable income, it is the one account you can dip into in a high-income year without setting off any of those tripwires. If a big expense would otherwise push you over a Medicare threshold or into the next bracket, the Roth can keep you under the line when an ordinary withdrawal could not. Treated strictly as the last resort, it gives up that usefulness. It is less a final reserve than a valve you open in exactly the years it helps.
When the simple order is fine
None of this means the plain order is wrong for everyone. If your pre-tax balances are modest, if guaranteed income already covers your needs, or if your bracket is low and likely to stay there, taxable-first and Roth-last may be all you need. There is no sequence that is right for everyone. It depends on the size of each pile, your bracket now against the one you expect later, your other income, your health, and what you hope to leave behind. It is also worth mapping with a tax professional before you act, because the central moves, Roth conversions above all, are hard to undo once made.
The order you draw from your accounts rarely feels like a big decision in any single year. It is a small choice you make over and over, and small choices compound. The people who pay the least tax across a long retirement are rarely the ones who found a clever trick. They are the ones who decided early to take their money out in a way their future self could live with.
Where we fit in. We integrate tax considerations into your investment strategy and collaborate with estate attorneys and CPAs to ensure your plan is coordinated. We are not a law firm or accounting firm, so we do not provide legal or tax advice. Everything in this material is for educational purposes, based on primary sources. Before taking any action, please consult the appropriate professionals to apply these ideas to your situation.
If you would like to look at the order that fits your own accounts, we are glad to map it with you. There is a time to talk on our schedule page whenever you are ready.
