There’s a standard rule for which accounts you should spend first in retirement.

Spend the taxable brokerage account first. Then move to the traditional IRA or 401(k). Save the Roth for last.

There’s logic behind that advice. Spending taxable assets first can allow your tax-deferred and tax-free accounts to continue compounding. It can also keep your taxable income relatively low in the first few years of retirement.

The problem is that retirement taxes aren’t calculated one year at a time.

Follow that withdrawal order on autopilot, and you may spend years congratulating yourself for keeping your tax bill low while quietly building a much larger one for later.

That’s because every dollar left growing inside a traditional IRA isn’t simply money you’ve deferred paying tax on. It’s also future taxable income that, eventually, you may no longer control the timing of.

And that changes the question you should be asking.

The question isn’t:

Which account should I spend first?

It’s:

Which account should fund the next dollar of spending this year, given what that decision may do to my taxes over the rest of my retirement?

That’s a very different problem.

The Default Rule Solves for This Year’s Tax Bill

The traditional withdrawal hierarchy exists for a good reason.

Suppose you retire with money spread among a taxable brokerage account, a traditional IRA and a Roth IRA. If you can meet your spending needs from the brokerage account without realizing much taxable income, your tax return may look remarkably clean.

Your traditional IRA continues growing tax-deferred.

Your Roth continues growing tax-free.

And your current tax bill stays relatively low.

Viewed one year at a time, that can look like smart tax planning.

Viewed over 20 or 30 years, it may not be.

Traditional IRA money eventually becomes subject to required minimum distributions. Under current law, the applicable RMD age is generally 73 for those born between 1951 and 1959, and 75 for those born in 1960 or later. Once RMDs begin, an IRS formula sets a minimum amount that has to come out each year.

That means a retiree who spends aggressively from taxable assets while leaving a large traditional IRA untouched can unintentionally concentrate more and more of your future wealth inside the one account that eventually forces taxable income onto your return.

The mistake isn’t tax deferral itself.

The mistake is assuming that more deferral is always better.

Sometimes Paying Tax Earlier Is the Tax-Saving Move

This is where retirement income planning gets counterintuitive.

For many higher-net-worth retirees, some of the most valuable tax-planning years arrive right after they stop working. The paycheck stops, bonuses and business income fade, Social Security may not have started yet, and required distributions haven’t begun. Someone who spent decades in relatively high brackets can suddenly have several years in which surprisingly little ordinary income lands on the return.

I think of these as tax-planning windows, and I don’t want to waste one simply because a retiree has enough sitting in a brokerage account to leave the IRA untouched. I wrote about this window in more depth in The Retirement Tax Window Most People Miss.

So this is one of the first places I look when building a retirement income strategy. We map the income already expected each year, pensions, Social Security, interest, dividends, capital gains and the rest, and then look at how much room remains inside the brackets we’re willing to use.

That may lead us to intentionally recognize additional IRA income. Sometimes that means taking a traditional IRA distribution and actually spending the money. Other times it means converting part of the traditional IRA to Roth and funding lifestyle spending elsewhere. A Roth conversion generally causes previously untaxed traditional IRA dollars to be included in taxable income in the year of the conversion.

Either way, the objective is the same:

Pay tax on some of the IRA when you choose the timing, instead of waiting until the tax code chooses it for you.

Academic research on retirement withdrawals supports this approach. James DiLellio and Daniel Ostrov examined individualized withdrawal strategies across taxable, tax-deferred and Roth accounts and found that sequencing can materially affect portfolio outcomes, arguing specifically against relying on simple chronological withdrawal rules when tax brackets, RMDs and other variables change over time.

More recent work from Stanford goes one step further: these decisions should be recalculated as circumstances change rather than solved once at retirement, with the strategy updated each year based on current balances, taxes, investment outcomes and inflation. That’s much closer to how I believe retirement income planning should actually work.

The Withdrawal Order Should Change From Year to Year

This is why I rarely think of retirement withdrawals as a fixed hierarchy.

I think of them as an annual coordination problem.

In a relatively low-income year, we may intentionally create taxable income from an IRA.

In another year, a large capital gain, pension payment, business transaction or other income event may already have filled the brackets we want to use. In that case, taxable assets or Roth dollars might make more sense for additional spending.

Once Social Security begins, we have another variable to coordinate.

Once Medicare begins, there’s another.

Once RMDs begin, there’s another.

The answer can change again after the death of a spouse, when the surviving spouse may eventually be filing under narrower single-filer tax brackets.

There’s no account that’s universally “first.”

There’s only the account that makes the most sense given the rest of that year’s financial plan.

Consider Two Retirees With the Same $2 Million

Imagine two recently retired households.

Each starts retirement with $2 million.

Each has the same amount in taxable investments, traditional retirement accounts and Roth accounts.

Each spends the same amount.

Their investments earn the same returns.

The difference is how they decide where the spending money comes from.

Retiree One: Follow the textbook order

The first household follows the conventional rule.

The brokerage account comes first.

They sell investments as needed to fund retirement and leave the traditional IRA alone for as long as possible.

Their tax returns initially look terrific.

With no paycheck and relatively little ordinary income, they may spend several years in unusually low brackets.

But they aren’t actually using those brackets for much of anything.

Meanwhile, the traditional IRA keeps compounding.

Eventually Social Security begins. Later, required minimum distributions begin.

Now the retiree has Social Security income, portfolio income and IRA distributions arriving on the same tax return.

And the IRA distribution is no longer entirely optional.

Retiree Two: Use the low-income years deliberately

The second household also uses the brokerage account for spending.

But each year, they look beyond the current tax bill.

While their taxable income is temporarily low, they intentionally take some money from the traditional IRA or convert part of it to Roth.

They may pay more tax in their 60s than the first retiree.

That’s intentional.

Because they aren’t trying to minimize taxes this year.

They’re trying to manage taxes across retirement.

By the time required distributions begin, the second household has a smaller traditional IRA balance and more money sitting in accounts that provide greater flexibility.

Same starting wealth.

Same lifestyle.

Same investment environment.

Different tax path.

And potentially a materially different amount of wealth available over their lifetime.

The point isn’t that Roth conversions automatically save taxes. They don’t. Converting too much, converting at the wrong tax rate or ignoring other parts of the tax return can make a conversion counterproductive.

The point is that withdrawal sequencing changes the timing and rate at which your retirement wealth gets taxed, and that timing can matter substantially.

Medicare Adds Another Threshold to Watch

Tax brackets aren’t the only line I watch. Medicare premiums move with income too.

Higher-income Medicare beneficiaries pay income-related surcharges, known as IRMAA, on Medicare Part B and Part D. Those surcharges generally use modified adjusted gross income from the tax return two years earlier. So a Roth conversion might lower future RMDs and raise a Medicare premium two years later.

That doesn’t mean you should avoid the conversion. It means the IRMAA cost needs to be part of the calculation.

I raise this because retirement tax decisions often get reduced to a single rule: “Don’t cross the next tax bracket,” or “Don’t trigger IRMAA.” Neither is a complete strategy. I’d willingly cross a threshold today if the long-term math favored it, and I wouldn’t convert an extra dollar simply because there’s technically room left in a bracket. The goal isn’t to fill brackets for the sake of filling brackets. It’s to understand what today’s marginal dollar of taxable income may save, or cost, you later.

Long-Term Map, Annual Decision

When I work through this decision with clients, I don’t want to look only at this year’s tax return. And I don’t want to rely solely on a 30-year retirement projection either. You need both.

First, we build the longer-term retirement income map: when employment income stops, when Social Security might begin, what pension income exists, how large the tax-deferred accounts could become and when required distributions are likely to enter the picture. That helps identify where the potential tax-planning windows exist. I walk through building that map in The Tax Cost of Retiring Without a Retirement Income Map.

Then we bring the decision back to the current year. How much ordinary income is already on the return? How much capital gain are we recognizing? What deductions are available? Are we approaching a Medicare threshold? Is there charitable giving to coordinate? What’s changed since the long-term projection was built?

That annual review matters because a 20-year tax projection isn’t a promise. Tax laws change. Markets change. Income, spending and the portfolio all change. So should the withdrawal strategy.

That’s why I don’t think the right question is, “What’s my retirement withdrawal order?” The better question is:

What should my withdrawal order be this year?

The Coordination Is the Plan

The textbook withdrawal order, taxable, then tax-deferred, then Roth, is useful as a starting point. It isn’t a retirement income strategy.

The retirees who have the greatest flexibility are often the ones who recognize that every account represents a different future tax choice. A taxable account gives you one set of choices. A traditional IRA gives you another. A Roth gives you another. Which assets you hold inside each is a related decision, one I cover in Asset Location: The Retirement Tax Mistake Hiding in Plain Sight.

The goal isn’t to empty those accounts in some predetermined sequence. It’s to coordinate them so that you can fund the life you want while controlling when and how much taxable income shows up along the way.

That may mean deliberately paying more tax in certain years. It may mean leaving a tax bracket partially unused in another. It may mean converting IRA dollars before Social Security begins, or using Roth assets during an unusually high-income year. And it means revisiting the decision every year rather than setting the withdrawal order on the day you retire and never looking at it again.

The standard withdrawal order is a default, not a decision.

Decide the order while you still have the ability to choose.

Because once required distributions begin, part of that choice has already been made for you.

Sources

Internal Revenue Service, Retirement Plan and IRA Required Minimum Distribution FAQs:
https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs

Internal Revenue Service, Retirement Plans FAQs Regarding IRAs (including Roth conversions):
https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras

Social Security Administration, Medicare Premiums and income-related adjustments:
https://www.ssa.gov/benefits/medicare/medicare-premiums.html

Centers for Medicare & Medicaid Services, 2026 Medicare Parts A & B Premiums and Deductibles fact sheet:
https://www.cms.gov/newsroom/fact-sheets/2026-medicare-parts-b-premiums-deductibles

DiLellio, James, and Daniel Ostrov, “Toward Constructing Tax Efficient Withdrawal Strategies for Retirees with Traditional 401(k)/IRAs, Roth 401(k)/IRAs, and Taxable Accounts” Financial Services Review
https://openjournals.libs.uga.edu/fsr/article/view/3419

Johansson, Kasper, and Stephen Boyd, “A Tax-Efficient Model Predictive Control Policy for Retirement Funding,” Journal of Retirement
https://web.stanford.edu/~boyd/papers/retirement.html