Why the order matters more than the amount
Most retirees hold three kinds of accounts: taxable (a regular brokerage or savings account), tax-deferred (a traditional IRA or 401k), and tax-free (a Roth IRA or Roth 401k). Each is taxed differently when you pull money out, so the sequence in which you tap them directly changes your tax bill. Two retirees with identical savings can end up tens of thousands of dollars apart over a 30-year retirement simply because one paid attention to the order and the other did not.
The conventional rule of thumb is to spend taxable accounts first, let tax-deferred accounts keep compounding, and save Roth dollars for last. The logic is simple: the longer your tax-advantaged accounts grow untouched, the more tax-sheltered compounding you capture. As financial planning researcher Michael Kitces notes, that conventional view treats deferral as an unqualified good (Kitces, "Tax-Efficient Spending Strategies From Retirement Portfolios").
The standard sequence: taxable, then tax-deferred, then Roth
Start with taxable accounts. Withdrawals here are not taxed as income; you only owe tax on realized gains, and long-term capital gains are taxed at preferential rates (0 percent, 15 percent, or 20 percent depending on income) per the IRS rules on capital gains (IRS, "Topic No. 409, Capital Gains and Losses"). Spending these dollars first lets your IRA and Roth keep growing in their tax shelters.
Next, draw from tax-deferred accounts. Every dollar you withdraw from a traditional IRA or 401k is taxed as ordinary income, which in 2026 runs from 10 percent up to 37 percent (IRS, Revenue Procedure 2025-32). Tapping these in your 60s and early 70s, before required distributions begin, lets you control the timing and the bracket.
Save Roth accounts for last. Qualified Roth withdrawals are completely tax-free, and Roth IRAs have no required minimum distributions during the original owner's lifetime (IRS, "Retirement Topics - Required Minimum Distributions"). That makes Roth dollars the most flexible money you own and the best account to leave to heirs.
Where the simple rule breaks: the deferral trap
Kitces warns that it is possible to be "too good" at tax deferral. If you leave a large traditional IRA untouched for years, it can grow so large that required minimum distributions later spill out a wave of taxable income all at once, vaulting you into a higher bracket in your 70s and 80s than you ever paid while working (Kitces, "Tax-Efficient Spending Strategies From Retirement Portfolios"). The fix is to not let your low brackets "go to waste" in your early retirement years.
Filling the brackets: the 2026 numbers to watch
For 2026, a married couple filing jointly stays in the 12 percent bracket on taxable income up to $100,800, then jumps to 22 percent, and crosses into the 24 percent bracket above $211,400 (IRS, Revenue Procedure 2025-32; Tax Foundation, "2026 Tax Brackets"). The standard deduction for joint filers rises to $32,200 in 2026, so a couple can realize a meaningful amount of income before owing much at all (IRS, Revenue Procedure 2025-32).
The strategy is to deliberately pull just enough from your tax-deferred IRA each year, or convert it to Roth, to "fill up" the 12 percent or 22 percent bracket without spilling into the next one. This trims the balance that will eventually be subject to RMDs and locks in today's lower rate on those dollars.
How RMDs reshape the plan
Required minimum distributions are the deadline that forces money out of tax-deferred accounts. Under SECURE 2.0, RMDs begin at age 73 for those born between 1951 and 1959, and at age 75 for anyone born in 1960 or later (IRS, "Retirement Plan and IRA Required Minimum Distributions FAQs"). Your annual RMD equals your prior year-end balance divided by an IRS life-expectancy factor from the Uniform Lifetime Table (IRS, Publication 590-B).
Miss an RMD and the penalty is steep: SECURE 2.0 cut the excise tax from 50 percent of the shortfall to 25 percent, dropping to 10 percent if you correct it within the IRS correction window (IRS, "Retirement Plan and IRA Required Minimum Distributions FAQs"). The window between your retirement date and your RMD start age, often the late 60s to early 70s, is the prime time to shrink future RMDs through bracket-filling withdrawals and Roth conversions.
Run your own numbers before you convert
Roth conversions are the lever that ties this whole strategy together: you move money out of the tax-deferred bucket at today's known rate to avoid an unknown, possibly higher rate later. But the right conversion amount depends on your brackets, your other income, and your Medicare premium thresholds. Before you act, model a few scenarios with our <a href="/calculators/roth-conversion">Roth conversion calculator</a> to see how much you can convert this year while staying inside your target bracket.
A practical order of operations
A workable default for many 50-plus households: spend taxable accounts for day-to-day cash flow, but each year layer in either a withdrawal or a Roth conversion from your traditional IRA to fill your current bracket up to a chosen ceiling. Let Roth dollars grow untouched for late retirement and legacy. Revisit the plan annually, because a market drop, a large medical bill, or a change in tax law can shift the optimal amount.
This article is educational and not personalized tax or financial advice. Tax rules change and depend on your situation. Consider consulting a CPA or fiduciary advisor.