Published April 2026

The Best Withdrawal Order for Your Retirement Accounts

There's a piece of conventional wisdom about retirement withdrawals that gets repeated so often it feels like law: spend your taxable brokerage first, then your Traditional IRA, then your Roth last. Save the Roth as long as possible to maximize tax-free growth.

It's not wrong exactly. It's just incomplete — and for a lot of retirees, following it blindly will cost them tens of thousands of dollars in taxes they didn't have to pay.

The real answer to "which account do I tap first?" is: it depends on your tax bracket, and the goal is to smooth your tax liability across decades — not just defer it. Here's what that actually means in practice.

The Three Buckets and How They're Taxed

Before talking about order, you need to understand what you're actually doing when you withdraw from each account type. The tax treatment is completely different.

Taxable Brokerage

Funded with after-tax dollars. When you sell investments that have gained value, you owe capital gains tax — either short-term (ordinary income rates, same as your salary) or long-term (much lower, 0%/15%/20% depending on your income). If your total income is low enough, you might owe zero federal tax on long-term gains. That's not a loophole — it's by design, and it's powerful.

Traditional IRA / 401(k)

Funded with pre-tax dollars — you got a deduction when the money went in, so the IRS deferred your tax bill. Every dollar that comes out is taxed as ordinary income. No favorable capital gains rates. If you pull $60,000 from your Traditional IRA, that $60,000 is treated exactly like a $60,000 paycheck for tax purposes.

Roth IRA / Roth 401(k)

Funded with after-tax dollars. Growth and qualified withdrawals are completely tax-free. Roth IRAs also have no Required Minimum Distributions during the original owner's lifetime, which makes them valuable for estate planning and for managing taxable income late in retirement.

Why "Brokerage First, Roth Last" Falls Apart

The conventional order has a logic to it: let your tax-advantaged accounts keep compounding as long as possible. But it ignores something important — what's happening to your Traditional IRA while you leave it alone.

Say you retire at 62 with $1.2 million spread across your accounts, and you spend exclusively from your brokerage for the next 8 years. Your Traditional IRA sits untouched. At 6% annual growth, that $600,000 Traditional balance becomes roughly $956,000 by the time you hit 70. Your RMDs — starting at age 73 for most people, or 75 if you were born in 1960 or later — will be mandatory withdrawals from nearly a million-dollar account, all taxed as ordinary income, stacking on top of Social Security and whatever else you have coming in.

You didn't avoid taxes. You just delayed them and let the balance compound — which means you deferred more taxes on more money. That's the "tax bomb" that ambushes people in their 70s.

A Tale of Two Retirees: The Numbers

Let's put real numbers to this. Meet Dave and Karen. Both retire at 62, both married filing jointly, both need $80,000 per year to live on. Both receive $24,000 per year from Social Security (total household). Both have identical portfolios:

They need $56,000 more from their portfolios each year after Social Security covers the rest. This is where their strategies diverge.

Dave's Strategy: Conventional Order

Dave does what he read online. Brokerage first, then Traditional, Roth last.

In Year 1, Dave pulls $56,000 entirely from his brokerage account. His investments have grown, so roughly $40,000 of that withdrawal represents long-term capital gains. His taxable income looks like this:

Not bad. Dave pays about $2,820 in year 1. His Traditional IRA sits untouched and keeps compounding. Everything looks fine.

Fast-forward 8 years. Dave's brokerage account is depleted. He starts pulling from his Traditional IRA, which has grown to ~$956,000 at 6% annual returns. He needs the same $56,000 from his portfolio, but now it's all ordinary income:

Dave's tax bill nearly doubled — and that's before RMDs kick in at 73 and force even larger withdrawals on top of everything else.

Karen's Strategy: Bracket-Aware Blended Withdrawals

Karen takes a different approach from day one. She looks at her tax bracket and asks: how much can I pull from my Traditional IRA right now while still staying in the 12% bracket?

The top of the 12% federal bracket for MFJ in 2026 is $100,800 of taxable income. After the standard deduction and Social Security, Karen has room to convert or withdraw about $72,000 from her Traditional IRA before she'd cross into 22%. She doesn't need that much — she needs $56,000 total — so she decides to pull $30,000 from Traditional and $26,000 from her brokerage each year, keeping her bracket exposure low while steadily reducing her pre-tax balance.

Karen pays a little more in year 1 than Dave. But she's deliberately drawing down her Traditional balance while it's manageable. Eight years later, her Traditional IRA has grown to roughly $668,000 instead of Dave's $956,000 — because she's been taking bites out of it the whole time. Her RMD exposure at 73 is dramatically lower. And she still has Roth money sitting untouched as a tax-free reserve.

The 0% Capital Gains Opportunity Most People Miss

Here's a detail that almost nobody takes advantage of: for married couples filing jointly in 2026, long-term capital gains are taxed at 0% up to $98,900 of taxable income.

In early retirement, before Social Security is fully in effect and before RMDs begin, your taxable income can be low enough to sell appreciated brokerage assets with zero federal capital gains tax. That's not a theoretical edge case — it's a real planning window that closes eventually as income sources pile up.

If you have highly appreciated brokerage positions you've been holding for years, the gap between retirement and full Social Security + RMD income is potentially your one chance to harvest those gains at 0%. Leaving brokerage money untouched because "you're supposed to spend it first" can mean missing that window entirely.

Where Roth Withdrawals Fit In

Roth money is your most flexible asset. It adds zero to your taxable income. It doesn't affect how much of your Social Security is taxable. It doesn't trigger IRMAA surcharges. You can pull from it in any year, in any amount, without consequence.

That flexibility is worth preserving — which is why "spend your Roth last" has some logic. But "last" doesn't mean "never touch it." It means use it strategically:

• In a year where you need more income than your bracket can absorb from Traditional withdrawals, top up from Roth instead of pushing into a higher bracket.
• In a year with a large unexpected expense — a medical bill, a car, a home repair — Roth is the clean answer. No tax consequences, no bracket disruption.
• After 73, when RMDs are already filling your lower brackets, Roth becomes your pressure valve. The mandatory Traditional withdrawals cover your base expenses; Roth covers anything extra without compounding your tax bill.

The RMD Problem: Why This All Comes to a Head at 73 (or 75)

Required Minimum Distributions begin at age 73 for anyone born before 1960, and at age 75 for anyone born in 1960 or later — a change made by SECURE 2.0. Regardless of which age applies to you, the mechanics are the same: the IRS requires you to withdraw a minimum amount from your Traditional IRA each year, calculated by dividing your year-end balance by a life expectancy factor from their Uniform Lifetime Table.

At age 73, that divisor is 26.5. At 80, it's 20.2. At 85, it's 16.0. The divisor shrinks every year, which means the required withdrawal as a percentage of your balance grows every year — whether you want the money or not, and whether you need it or not.

Dave's RMDs are $10,000 a year higher than Karen's — for the rest of his life, whether he needs the money or not. And those RMDs compound the problem: the forced withdrawals get reinvested somewhere, which creates more taxable income in future years. Karen quietly defused this over the prior decade by taking modest Traditional withdrawals every year.

The Practical Framework: How to Actually Decide Each Year

Withdrawal order isn't a set-it-once decision. It's an annual tax management exercise. Here's a working framework for each year in retirement:

1. Start with your income floor. Add up Social Security, pensions, annuity income, rental income — everything coming in that you can't control. This establishes your baseline taxable income before any portfolio withdrawals.
2. Calculate your bracket headroom. How much more ordinary income can you absorb before crossing into the next bracket? For MFJ in 2026: 12% bracket tops out at $100,800 of taxable income; 22% tops out at $211,400. After the standard deduction and your income floor, how much room do you have?
3. Fill that room from Traditional first, up to your target bracket ceiling. If you have $40,000 of headroom in the 12% bracket, pull $40,000 from Traditional — even if your brokerage has money. You're paying 12% now instead of 22% or higher later.
4. Cover any remaining need from brokerage, harvesting gains at the lowest rate possible. If your total income is under the 0% LTCG threshold ($98,900 MFJ), those gains may be tax-free.
5. Use Roth for any shortfall, or to avoid crossing a bracket ceiling. Roth is your overflow valve. Pull from it when you need income but can't afford the tax hit of more Traditional or brokerage withdrawals.
6. Check your IRMAA exposure. From age 63 onward, keep an eye on your projected MAGI. The first IRMAA threshold for MFJ is $212,000. Crossing it adds Medicare surcharges based on income two years prior — a cost that has nothing to do with your income tax rate but can bite hard if you're not watching.

Early Retirement Changes the Math Significantly

Everything above applies to a standard retirement timeline. If you're retiring before 60, there are additional wrinkles worth knowing.

In your early retirement years — before Social Security, before any pension, before RMDs — your taxable income might be genuinely low. Low enough to be in the 10% or 12% bracket even with meaningful Traditional withdrawals. That's your prime window for Roth conversions and tax-gain harvesting, not just withdrawals.

The access question also matters: before 59½, Traditional 401(k) withdrawals trigger a 10% penalty on top of income taxes, unless you qualify for an exception (Rule of 55, 72(t) distributions, separation from service). Roth contributions — not earnings — can be withdrawn any time, penalty-free. And taxable brokerage has no age restrictions at all.

For early retirees, the practical order in the pre-59½ years often looks different: brokerage and Roth contributions first for penalty-free access, careful Traditional IRA withdrawals via 72(t) if needed, and aggressive Roth conversions during the low-income gap years to reduce the future tax bomb before it gets worse.

The Short Version

There is no single correct withdrawal order. There's a tax-aware withdrawal order that changes every year based on your income, your bracket, your account balances, and where you are relative to RMDs and IRMAA thresholds.

The conventional "brokerage first, Roth last" rule isn't wrong — it's just incomplete. The better version of it is: fill your lower brackets with Traditional withdrawals every year, use brokerage gains at the lowest possible capital gains rate, and preserve Roth for flexibility and overflow.

Done consistently over a 10–15 year retirement runway, this approach can reduce your lifetime tax bill by tens of thousands of dollars compared to the default "don't touch the IRA" strategy. The tax bomb doesn't announce itself. It just arrives at 73 or 75 — whenever your RMDs begin — with your first mandatory withdrawal notice and a tax bill you can't do anything about anymore.

Plan ahead. Run the numbers. Don't let the IRS decide your withdrawal order for you.