Which Retirement Account Should You Tap First? A 5-Step Framework
The standard “taxable first, then IRA, then Roth” rule is a starting point. For most retirees, blindly following it quietly costs tens of thousands of dollars in unnecessary taxes.
Here’s a scenario worth thinking about. You’re 65 years old, freshly retired, with money spread across a brokerage account, a traditional IRA, and a Roth. You need $80,000 this year to live on. Which account do you open first?
If you said “just take it from wherever,” you’re not alone. But the account you tap, and the sequence in which you draw them down over the next 20 years, can mean the difference between a comfortable retirement and one where your tax bill quietly consumes a significant chunk of your savings. A tax-smart withdrawal strategy can add years to portfolio longevity, according to financial planners surveyed in a 2026 retirement planning roundup.
The answer isn’t one-size-fits-all, and anyone telling you it is hasn’t thought through the variables. This framework walks you through five decision points, in order, that determine the right sequence for your situation.
The right order to withdraw from retirement accounts depends on five factors: your current tax bracket, how close you are to required minimum distributions (RMDs), whether you’re still in a Roth conversion window, whether your income might trigger Medicare IRMAA surcharges, and what you want to leave behind. The classic rule, taxable accounts first, then tax-deferred, then Roth last, holds in many cases, but breaks down when RMDs, bracket management, or estate goals enter the picture. Work through these five steps before making your first withdrawal.
1
Start With Your Current Tax Bracket, Not a General Rule
Before anything else, you need to know where you sit in the tax code right now. Every dollar you pull from a traditional IRA or 401(k) is ordinary income, taxed the same as a paycheck. Every dollar from a taxable brokerage account holding appreciated stock is a long-term capital gain, which carries much lower rates. And every dollar from a Roth comes out free.
In 2026, long-term capital gains are taxed at 0% for married couples with taxable income up to $98,900, and for single filers up to $49,450. That means a couple with modest income in early retirement may be able to harvest gains from a taxable account and pay nothing federally. Meanwhile, pulling the same amount from a traditional IRA at a 22% ordinary income rate would cost over $17,000 in taxes on a $80,000 withdrawal.
The practical first step: run your projected income for the year, Social Security if you’re claiming it, any pensions, any part-time work, and see how much room you have in each bracket before tapping accounts.
Map your bracket before each year’s withdrawals. If you’re in a low-income year, taxable account gains or Roth conversions may be nearly tax-free.
Source: CNBC / IRS Revenue Procedure 2025-32 via Tax Foundation
2
Check Whether RMDs Are Imminent, They Change Everything
Required minimum distributions are one of the most underappreciated forces shaping retirement tax bills. Under the SECURE 2.0 Act, you must begin taking RMDs from traditional IRAs and 401(k)s at age 73 if you were born between 1951 and 1959, or at age 75 if you were born in 1960 or later. Miss one and you owe a 25% excise tax on the amount you should have taken.
Here’s what most people miss: if you let a large traditional IRA sit untouched from age 63 to 75, twelve years of tax-deferred growth can balloon the balance enormously. The RMDs on that larger number will be forced into your income whether you need the money or not, potentially pushing you into a higher bracket, making more of your Social Security taxable, and triggering Medicare surcharges all at once.
If RMDs are fewer than five or six years away and you have a large pre-tax balance, the smart move is often to draw down that account deliberately in the years before RMDs begin, even if it means paying some tax now to avoid a bigger bill later.
Look at your traditional IRA and 401(k) balance today. If you’re 63 or 64 and that balance is large, you may want to pull from it now, intentionally, to shrink future RMDs before they become mandatory.
Source: IRS.gov — Retirement Topics: Required Minimum Distributions
“For most retirees, the gap between retirement and RMDs is the single most valuable tax planning opportunity they will ever have, and many leave it completely unused.”
Income Laboratory, Roth Conversion Strategy 2026 Guide
3
Ask Whether You’re Still Inside the Roth Conversion Window
The years between retirement and the start of Social Security and RMDs are often the lowest-income stretch a person will see for the rest of their life. Your salary is gone. Social Security may not have started. No RMDs yet. That combination creates what planners call the Roth conversion window, a chance to move money from a pre-tax IRA into a Roth at unusually low tax rates.
Converting $40,000 to $60,000 per year during this window at a 12% or 22% rate is often far cheaper than letting that same money compound and eventually come out as RMDs taxed at 24% or higher. Once RMDs begin, they lock in a baseline level of taxable income you can’t easily reduce. The conversion window, for most retirees, is 5 to 12 years, and it doesn’t roll over.
During the conversion window, your withdrawal sequence may actually flip from the standard playbook: you might deliberately tap the traditional IRA first (or convert a portion of it each year) while leaving the taxable brokerage account to benefit from continued lower capital gains treatment.
Don’t assume the Roth should always be last. In the conversion window, drawing down your traditional IRA first, or converting it, can save far more in lifetime taxes than saving the Roth for later.
If you retired this year and aren’t yet taking Social Security, ask an advisor to model what a partial Roth conversion looks like over the next five years. This is where significant money is either saved or quietly lost.
Source: Income Laboratory, Roth Conversion Strategy 2026 Guide & Atomic Planning
4
Watch for IRMAA Exposure Before Raising Your Income
Medicare looks at your income from two years ago to set your current premiums. In 2026, the IRMAA surcharge kicks in at $109,000 of modified adjusted gross income for single filers and $218,000 for married couples filing jointly. Once you cross a threshold, your monthly Medicare Part B premium jumps from the standard $202.90 to $284.10, and it can go much higher from there.
What makes this especially tricky: a single large IRA withdrawal or Roth conversion that pushes your MAGI over a threshold by just $1 can cost a couple thousands of dollars more in Medicare premiums the following year. The difference between the first IRMAA tier and no surcharge is roughly $2,297 per year for a couple, according to 2026 CMS data analyzed by Income Laboratory.
This doesn’t mean you should avoid withdrawals near these thresholds, sometimes it’s worth paying the surcharge for other planning benefits. But it does mean you need to know where you stand before taking any large withdrawal or doing a Roth conversion. Check your projected MAGI before December 31 each year, not after.
If your income is within $20,000 of an IRMAA threshold, model the withdrawal carefully before year-end. Staying just below can save a couple over $2,000 annually in Medicare premiums, and that adds up fast over a 20-year retirement.
Source: Kiplinger — Medicare Premiums 2026: IRMAA Brackets and Surcharges
5
Consider Your Estate Goals Before Deciding What to Preserve
If leaving assets to heirs matters to you, the type of account you pass on is almost as important as the amount. Roth IRAs are among the most tax-efficient assets you can leave, because heirs receive them without owing income tax on withdrawals (subject to certain inherited IRA rules). Traditional IRAs pass the full tax liability to whoever inherits them, and under the SECURE 2.0 rules, most non-spouse beneficiaries must distribute the entire account within ten years, potentially at their peak earning years.
A taxable brokerage account, by contrast, typically receives a step-up in cost basis at death, which means your heirs can sell appreciated assets without owing capital gains tax on the growth that occurred during your lifetime. That’s a significant benefit for highly appreciated portfolios.
The practical implication: if your estate goals are strong, preserving the Roth and the taxable account for heirs, while drawing from the traditional IRA during your lifetime, often produces the best outcome across the whole family. This is where the “Roth last” rule can actually flip entirely.
- Best for heirs: Roth IRA (tax-free inheritance), taxable accounts with stepped-up basis
- Least favorable for heirs: Traditional IRA / 401(k) (fully taxable to beneficiaries)
- Conversions during your lifetime move money from the least favorable category to the most, at your tax rate instead of your heirs’
If you have adult children in high income brackets, think carefully before leaving them a large traditional IRA. They’ll owe income tax on every distribution, often at their own 32% or 37% rate.
Source: IRS.gov — Required Minimum Distributions FAQs
Common Questions
What is the standard rule for which retirement account to withdraw from first?
The traditional rule is to spend taxable accounts first, then tax-deferred accounts like a 401(k) or traditional IRA, and preserve Roth accounts for last. This logic has merit, it defers ordinary income tax as long as possible and keeps the Roth growing tax-free. But the rule breaks down when RMD timing, Roth conversion opportunities, IRMAA thresholds, or estate goals enter the picture. A plan built around your actual situation almost always beats the generic sequence.
When do required minimum distributions start in 2026?
Under the SECURE 2.0 Act, RMDs from traditional IRAs and 401(k)s begin at age 73 for those born between 1951 and 1959, and at age 75 for those born in 1960 or later. Missing an RMD carries a 25% excise tax on the amount not taken. Roth IRAs have no required minimum distributions during the owner’s lifetime, which is one reason they’re so valuable for both retirement income flexibility and estate planning.
Source: IRS.gov
What is the Roth conversion window and why does it matter?
The Roth conversion window is the period between retirement and when Social Security and RMDs begin, often 5 to 12 years, when many retirees are in their lowest tax bracket of their adult lives. Converting pre-tax IRA money to a Roth during this period means paying tax at today’s lower rates rather than at higher rates later when RMDs add mandatory income. It also reduces future RMDs, which compounds the benefit over time. Once RMDs begin, they push income up and the window effectively closes.
What is IRMAA and how does withdrawal order affect it?
IRMAA is the Medicare surcharge added to Part B and Part D premiums when your Modified Adjusted Gross Income exceeds certain thresholds. In 2026, it kicks in at $109,000 for single filers and $218,000 for married couples. Because Medicare looks at income from two years prior, a large withdrawal or Roth conversion this year affects what you pay in Medicare premiums two years from now. Even $1 over a threshold can trigger hundreds or thousands in additional annual costs, so income should be projected carefully near year-end.
Source: Kiplinger
Should I tap my Roth IRA in retirement or leave it alone?
For most retirees, leaving the Roth untouched and growing is the right default, it has no RMDs, all withdrawals are tax-free, and it’s one of the best assets to pass to heirs. But Roth accounts also serve as a pressure valve in high-income years: if a large capital gain, an unexpected expense, or a one-time income event would push you over an IRMAA threshold or into a higher bracket, drawing from the Roth instead of the traditional IRA keeps your taxable income flat. The Roth’s power is flexibility, it gives you options that other account types don’t.
Rules of thumb only get you so far. The five factors above interact with each other, and the math shifts every year as balances, tax law, and your income picture change. If you’d like to talk through how this framework applies to your specific accounts and goals, the team at Madison Partners is happy to have that conversation.
This content is for educational purposes only and should not be considered financial, tax, legal, or investment advice. Individual circumstances vary, and readers should consult with a qualified financial advisor, tax professional, or attorney before making decisions based on this information. Madison Partners does not guarantee the accuracy of third-party data cited herein.
