What Is the Best Order to Withdraw from Retirement Accounts? (2026)

The standard withdrawal order is: taxable brokerage accounts first, traditional IRA and 401k second, Roth IRA last. This sequence minimizes lifetime taxes by drawing from lower-taxed accounts early and preserving tax-free Roth growth as long as possible. But the right order for you depends on your tax bracket, Social Security timing, RMD schedule, and whether you're in an unusually high or low income year — and the standard order should be broken strategically in specific situations.

This guide gives you a clear decision framework for every phase of retirement.

Why Withdrawal Order Matters

Most retirees think about how much to withdraw. Fewer think carefully about which account to withdraw from — and that decision can easily be worth $50,000–$150,000 in lifetime tax savings.

The reason: different accounts are taxed at dramatically different rates and times.

Account type	Tax on withdrawal	Tax rate
Taxable brokerage	Capital gains only (on growth)	0–20% (long-term)
Traditional IRA / 401k	Ordinary income on every dollar	10–37%
Roth IRA / Roth 401k	Zero — completely tax-free	0%
HSA (medical expenses)	Zero — completely tax-free	0%
HSA (non-medical, age 65+)	Ordinary income	10–37%

Given these differences, sequencing withdrawals to favor lower-taxed sources in any given year is straightforward logic — but execution requires understanding when each account type is optimal and when the standard order should be adjusted.

Map your accounts against your retirement budget: Use our free retirement budget calculator to understand your full income picture before deciding on a withdrawal sequence.

The Standard Withdrawal Order Explained

Phase 1: Taxable brokerage accounts

Draw from taxable investment accounts first. Why:

Lower tax rates. Long-term capital gains are taxed at 0%, 15%, or 20% — not at ordinary income rates. Many retirees qualify for the 0% capital gains rate on income below $47,025 (single) or $94,050 (married filing jointly) in 2026
Tax-loss harvesting opportunities. You can sell losing positions to offset gains, reducing the taxable amount of each withdrawal
Allows tax-deferred and tax-free accounts to keep compounding. Every year you don't touch a traditional IRA, it continues growing without any annual tax drag
Basis recovery is partially tax-free. When you sell shares in a taxable account, you only pay tax on the gain above your cost basis — a portion of each withdrawal is effectively tax-free return of principal

The exception: If your taxable account holds mostly low-basis positions (unrealized gains close to the total value), withdrawals may trigger significant capital gains. In that case, evaluate whether harvesting those gains in low-income years or holding until death (for a step-up in basis) makes more sense.

Phase 2: Traditional IRA and 401k

Once taxable accounts are depleted — or in years when strategic bracket management calls for it — shift to traditional accounts. The key principle here is bracket management: never withdraw more than you need to from traditional accounts in any given year, because every extra dollar is taxed at ordinary income rates.

The exception to drawing from traditional accounts last within this phase: Required Minimum Distributions. At age 73, the IRS forces withdrawals from traditional accounts regardless of your preference. RMDs must be taken — and they count as ordinary income — whether or not you need the money.

Phase 3: Roth IRA (last)

Draw from Roth accounts only after taxable accounts are depleted and traditional withdrawals would push you into a higher bracket or trigger undesirable tax consequences. Why Roth accounts last:

Completely tax-free withdrawals — Roth income doesn't count toward ordinary income, capital gains thresholds, Social Security taxation triggers, or Medicare IRMAA surcharges
No Required Minimum Distributions — Roth IRAs are exempt from RMDs during your lifetime, meaning the account can compound tax-free indefinitely
Best asset to leave to heirs — Inherited Roth IRAs can be withdrawn tax-free by beneficiaries (though distribution rules apply)
Maximum flexibility — Roth withdrawals create no income "side effects" on other calculations

The Roth account is your financial shock absorber. In years when traditional account withdrawals or capital gains push your income unexpectedly high, Roth withdrawals cover the difference without adding to taxable income.

HSA: The wild card

If you have an HSA with significant balance:

Before 65: Withdrawals for qualified medical expenses are completely tax-free. Use HSA funds for healthcare costs in retirement instead of taxable or retirement account withdrawals — it's effectively a fourth tax-free bucket
After 65: HSA withdrawals for non-medical expenses are taxed as ordinary income (same as a traditional IRA) but without a penalty. For healthcare expenses, still completely tax-free
Strategy: Pay current medical bills out-of-pocket when possible during working years, keep receipts, and reimburse yourself from the HSA tax-free in retirement years when you need extra cash

When to Break the Standard Order

The standard sequence is a framework, not a rule. These situations call for deliberate deviation:

Break it when: You have room in the 12% bracket

If your taxable income is low in a given year — perhaps because Social Security isn't yet claimed, you have no pension, and your taxable account is small — you may have unused space in the 12% federal bracket ($48,475 for singles, $96,950 for married couples in 2026).

Action: Deliberately withdraw from traditional accounts (or do Roth conversions) up to the top of the 12% bracket, even if you don't strictly need the money yet. Pay 12% now to avoid 22–24% later when RMDs are larger.

This is the Roth conversion strategy in practice — using standard order flexibility to optimize lifetime taxes. See the full breakdown: how to withdraw from retirement accounts tax-efficiently.

Break it when: You're approaching an IRMAA threshold

Medicare IRMAA surcharges kick in at specific income thresholds — $106,000 for single filers, $212,000 for married couples in 2026. If a traditional account withdrawal would push you over a threshold, consider substituting a Roth withdrawal instead. Roth withdrawals don't count toward MAGI for IRMAA purposes.

Example: A married couple with $205,000 in income needs $10,000 more for a home repair. A traditional IRA withdrawal pushes them to $215,000 — crossing the first IRMAA tier and costing an extra $888/year in Medicare premiums two years later. A Roth withdrawal covers the same need with zero impact on Medicare premiums.

Social Security benefits become taxable when combined income exceeds $25,000 (single) or $32,000 (married). Each dollar of traditional IRA withdrawal adds a dollar to combined income — potentially making up to 85 cents of Social Security taxable for every additional dollar withdrawn.

Action: When near Social Security taxation thresholds, substitute Roth withdrawals for traditional account withdrawals. Roth income doesn't count as combined income — it doesn't trigger additional SS taxation.

Break it when: You have a large one-time expense

For a large planned expense — a car purchase, home renovation, travel, supporting family — evaluate which account covers it most efficiently. If the expense is large enough to push you into a higher bracket from a traditional withdrawal, a Roth withdrawal may be net cheaper despite "saving" the Roth for later.

Break it when: Taxable account has very low basis

If selling a taxable account position would trigger large capital gains — because the position has appreciated dramatically — consider whether holding it until death (and the resulting step-up in basis) or donating it to charity makes more sense than selling and paying 15–20% capital gains. In those cases, shifting to traditional account withdrawals may be tax-efficient even in phase one.

The 0% Capital Gains Opportunity

One of the most underused strategies in retirement: harvesting long-term capital gains at 0%.

In 2026, the 0% long-term capital gains rate applies to taxable income up to:

$47,025 for single filers
$94,050 for married filing jointly

For many retirees in the early retirement years — before RMDs and before full Social Security — total taxable income may be low enough to sell appreciated positions in a taxable account completely tax-free.

Example: A married couple with $40,000 in Social Security (of which 85% = $34,000 is taxable) and $10,000 in other income has $44,000 of taxable income after the $32,300 standard deduction. They're well within the $94,050 threshold. They can sell up to $50,050 of long-term capital gains in their taxable account at 0% federal tax — harvesting gains and resetting their cost basis without any tax cost.

This opportunity disappears once RMDs begin and push income higher — which is why proactive harvesting in low-income years is one of the most valuable moves available to retirees with taxable accounts.

How RMDs Change the Withdrawal Order at 73

Required Minimum Distributions fundamentally alter the withdrawal order equation starting at age 73. RMDs are mandatory withdrawals from traditional IRAs and 401ks — calculated annually based on your account balance and IRS life expectancy tables.

What RMDs mean for your withdrawal order:

You no longer fully control Phase 2 timing — the IRS sets a floor on traditional account withdrawals
RMDs count as ordinary income, potentially pushing you into higher brackets and affecting Social Security taxation and IRMAA
If RMDs exceed your spending needs, the excess income is taxed even if you don't need it

The strategic response to RMDs:

Take RMDs first in any given year — they're mandatory and determine your baseline taxable income
Fund remaining expenses from the most tax-efficient source given where RMDs have placed your bracket — if RMDs push you to the top of the 22% bracket, avoid additional traditional withdrawals; use Roth or taxable instead
If RMDs produce more income than you need, invest the surplus in a taxable account rather than spending it — the compounding continues, just in a taxable wrapper
Consider Qualified Charitable Distributions (QCDs): Once you're 70½, you can donate up to $105,000/year (2026) directly from your IRA to a qualified charity, satisfying your RMD without the amount counting as taxable income — the most tax-efficient charitable giving strategy available

For complete RMD rules, calculations, and strategies, see: required minimum distributions explained and RMD strategies: how to minimize the tax hit.

A Decision Framework for Each Year

Rather than a fixed rule, think of withdrawal order as an annual decision guided by these five questions:

Question 1: What are my RMDs this year? Take them. They're mandatory and set your income floor. Everything else builds on top.

Question 2: What is my taxable income so far (including RMDs and any SS)? Know your bracket. This tells you how much room you have before hitting a higher rate, an IRMAA tier, or a Social Security taxation threshold.

Question 3: Do I have gains in my taxable account I could harvest at 0% or 15%? If you're in a low-income year, sell appreciated positions in your taxable account at favorable rates before the window closes (typically before RMDs make income permanently higher).

Question 4: How much additional income do I need beyond what's already counted? Calculate the gap between your income so far and your actual spending needs.

Question 5: What's the cheapest source for that additional income?

If it keeps you in 12%: draw from traditional IRA or do a Roth conversion
If it would push into 22%: use Roth withdrawal instead
If it would trigger an IRMAA tier: use Roth withdrawal
If it would push Social Security taxation higher: use Roth withdrawal
If your taxable account has harvestable gains: use taxable account with potential 0% rate

This annual decision process takes about 30 minutes with current account statements and a tax calculator — and can save thousands per year in unnecessary taxes.

How Withdrawal Order Affects Different Retirement Profiles

Profile A: Heavy traditional IRA, small Roth, moderate taxable

Challenge: RMDs will eventually force large taxable withdrawals regardless of need Strategy: Prioritize Roth conversions in early retirement to reduce traditional balance; use taxable account for bridge spending; draw traditional account strategically to stay in 12% bracket before 73 Caution: Don't defer all traditional withdrawals — RMD-forced income at 73+ may push you into 22–24% brackets that strategic early withdrawals could have avoided

Profile B: Large Roth, small traditional IRA, minimal taxable

Challenge: Roth-heavy retirees have excellent tax flexibility but may need to fund early retirement expenses Strategy: Standard order works well — spend taxable account first (even if small), use traditional account for ordinary expenses up to bracket limit, preserve Roth for flexibility Advantage: In high-expense years, Roth provides overflow without tax consequences

Profile C: All in traditional accounts, no Roth or taxable

Challenge: Every dollar of income is taxable; RMDs will be large Strategy: Begin Roth conversions immediately upon retirement; establish a taxable account with early retirement income if possible; plan for tax bracket management annually Priority: The conversion window from retirement to 73 is critical — use it aggressively at 12% rates

Profile D: Pension plus traditional IRA

Challenge: Pension income already partially fills tax brackets, leaving less room for traditional withdrawals at low rates Strategy: Pension income is fixed — work around it. Take smaller traditional withdrawals to avoid bracket creep; prioritize Roth withdrawals in high-expense years; pension income reduces Social Security taxation flexibility Consideration: Check whether pension income affects Social Security benefits (Government Pension Offset may apply for some government workers)

The Five Most Common Withdrawal Order Mistakes

1. Withdrawing from Roth accounts first. Some retirees incorrectly treat Roth accounts as "emergency funds" to be used first. This forfeits decades of additional tax-free compounding and eliminates your most valuable tax flexibility tool for later years.

2. Ignoring the 12% bracket opportunity. Leaving the 12% bracket unfilled in low-income years wastes the chance to withdraw traditional account money or convert to Roth at historically low rates. Many retirees pay 22% later on the same money they could have drawn at 12% earlier.

3. Not coordinating Social Security timing with withdrawal order. Claiming Social Security increases income, which affects how much bracket space is available for traditional withdrawals and Roth conversions. Withdrawals planned before SS filing need recalibration the year you claim.

4. Treating RMDs as the total required withdrawal. RMDs are the minimum. In low-bracket years, taking more than the RMD from traditional accounts and converting to Roth can prevent larger forced distributions at higher rates in future years.

5. Forgetting that taxable account withdrawals have a basis. Not all of a taxable account withdrawal is taxable income — only the gain above your cost basis. Retirees who assume each dollar of brokerage withdrawal is fully taxable may be overstating their tax liability and unnecessarily avoiding their taxable account.

Connect Withdrawal Order to Your Actual Budget

Withdrawal order decisions are only meaningful when grounded in your actual income needs. The right sequence depends on:

How much you need each month to cover real expenses
What income sources you already have (Social Security, pension, rental income)
How your accounts are currently allocated across taxable, traditional, and Roth
Your current and projected tax brackets
When RMDs begin and at what magnitude

Our free retirement budget calculator helps you establish your monthly income need precisely — so you can apply the withdrawal order framework to real numbers rather than estimates.

Related guides:

Frequently Asked Questions

What is the best order to withdraw from retirement accounts?

The standard order is: taxable brokerage accounts first (lower capital gains rates), traditional IRA and 401k second (ordinary income rates, but allows tax-free accounts to keep growing), Roth IRA last (completely tax-free, no RMDs, maximum flexibility). This sequence minimizes lifetime taxes for most retirees — with strategic exceptions for bracket management, IRMAA thresholds, and Social Security taxation triggers.

Should I withdraw from my IRA or Roth IRA first?

Traditional IRA first, Roth IRA last — in most cases. Traditional IRA withdrawals are taxed as ordinary income; Roth withdrawals are tax-free. Drawing from the traditional IRA while staying within lower brackets, and reserving the Roth for high-income years or as a tax-free emergency fund, produces lower lifetime taxes for most retirees. The exception: if a traditional withdrawal would push you into a significantly higher bracket or trigger IRMAA, a Roth withdrawal is cheaper despite "spending" the tax-free asset earlier.

Should I deplete one account before starting another?

Not necessarily. The goal is bracket management across all accounts each year — not strictly sequential depletion. In many years, the optimal strategy is to take a mix: spend some from taxable, convert some from traditional to Roth, and leave the Roth untouched. A rigid "empty account A before touching account B" approach misses annual optimization opportunities.

How do RMDs affect withdrawal order?

RMDs must be taken first each year — they're mandatory and non-negotiable. Your RMD amount establishes your income floor for the year. Everything else — additional withdrawals, Roth conversions, taxable account sales — is layered on top based on where that floor places you in the tax bracket structure.

Does withdrawal order matter if I'm in a low tax bracket?

Yes, but differently. In low-bracket years, the priority is taking advantage of that low rate — converting traditional to Roth, harvesting capital gains at 0%, or drawing more from traditional accounts than strictly necessary to prevent larger RMDs later. The standard order still applies, but low-income years create specific opportunities to "buy cheap" tax efficiency that compound favorably over a long retirement.

What is the most tax-efficient retirement withdrawal?

A Roth IRA withdrawal is the most tax-efficient withdrawal possible — zero tax, zero impact on other calculations. After that, qualified HSA withdrawals for medical expenses are equally tax-free. Long-term capital gains from taxable accounts are next — taxed at 0–15% for most retirees. Traditional account withdrawals, taxed as ordinary income at 10–37%, are least efficient and should be managed carefully to stay within lower brackets.

The Bottom Line

The best withdrawal order is the one that minimizes your lifetime tax bill — not just this year's tax bill. That means:

Taxable accounts first — lower capital gains rates, preserve tax-advantaged compounding
Traditional accounts second — drawn strategically to stay in lower brackets, including proactive Roth conversions in low-income years
Roth accounts last — tax-free, no RMDs, maximum flexibility for high-income years and emergencies

Layer in annual decisions about bracket management, IRMAA thresholds, Social Security taxation triggers, and RMD timing — and withdrawal order becomes an active, ongoing strategy rather than a one-time decision.

The payoff is real: thoughtful withdrawal sequencing routinely saves retirees $50,000–$200,000 in lifetime taxes compared to withdrawing without a plan.

Build your retirement income plan with our free budget calculator to understand your monthly needs — the foundation of every withdrawal order decision.

Last updated: May 2026. This article is for educational purposes and does not constitute personalized financial advice. Consult a licensed financial advisor or CPA for guidance specific to your tax situation.