Retirement Account Withdrawal Order: Which Account to Draw From First

The conventional wisdom — spend taxable accounts first, then traditional IRA, then Roth — made sense when it was written. For retirees with significant tax-deferred balances and an approaching RMD age, it's often the wrong sequence. Here's how to think about withdrawal order when RMDs are in the picture.

The Conventional Sequence (and Why It Falls Apart)

The textbook withdrawal order is: taxable accounts first → traditional IRA/401(k) second → Roth IRA last. The logic: defer taxes as long as possible on the pre-tax money while letting Roth assets compound tax-free.

The problem: this sequence was designed for accumulators. Once you approach the RMD age (73 for most people; 75 if born in 1960 or later¹), the IRS removes your choice on traditional IRA withdrawals. The RMD is a mandatory floor — you must take at least that amount whether you need the income or not. Spending taxable accounts exclusively while your traditional IRA grows means larger future RMDs, not smaller ones.

For retirees with $500K–$5M in tax-deferred accounts, the conventional sequence can easily add $100K–$300K in unnecessary lifetime taxes. The sequencing decision is not a minor detail.

The RMD Forcing Function

Starting at age 73, the IRS requires minimum distributions from all traditional IRAs, SEP-IRAs, and most 401(k)s. The amount is calculated as your account balance ÷ an IRS life expectancy factor from the Uniform Lifetime Table. At 73, that divisor is 26.5; by 83, it drops to 16.3 — meaning the percentage extracted grows each year.¹

A $2M traditional IRA balance at age 73 generates an RMD of ~$75,500 that year. At 80, if that account has grown to $2.4M, the RMD is ~$96,000. RMDs don't stop growing just because you don't need the income. They stack on top of Social Security, pensions, and any other income — pushing you into higher brackets whether or not you planned for it.

The practical implication: if you have 5–10 years before your RMD age, what you do now determines the income floor you'll face in your 70s and 80s. Spending only taxable accounts while deferring the traditional IRA is not "conservative" — it's compounding a future tax problem.

The Tax Bracket Decision (2026)

The right withdrawal sequence depends on your current tax bracket versus your projected future bracket. In 2026, the federal income tax brackets for married filing jointly are:²

The 2026 standard deduction is $32,200 for married couples filing jointly ($16,100 single), with an additional $1,650 per spouse aged 65 or older.²

The sequencing question is: will your traditional IRA withdrawals be taxed at a higher rate today, or at a higher rate later when RMDs force them? If your current marginal rate on IRA withdrawals is 22% but your projected RMD-era rate is 24–32%, taking more from traditional accounts now — or doing Roth conversions — is mathematically superior. If you expect to be in a lower bracket later (e.g., after a pension ends), deferral may make sense.

Roth Accounts: Last Resort Is Often Right — But Not Always

The Roth-last rule is generally correct for one clear reason: Roth IRAs have no lifetime RMDs for the original owner, and their growth is tax-free.³ Every year a Roth account stays invested is a year of tax-free compounding. Every year a traditional IRA stays invested is a year of tax-deferred compounding — but also a year of growing future RMD obligations.

Roth-last becomes wrong when:

• IRMAA management requires it. If taking traditional IRA distributions would push you above a Medicare surcharge cliff, using Roth to cover that marginal spending preserves your IRMAA tier. The annual Medicare savings ($974–$5,844/year per person⁴) can exceed the cost of spending down Roth assets.
• Your heirs are in high brackets. Roth IRAs pass to non-spouse beneficiaries income-tax-free, but they must drain them within 10 years (SECURE Act). If your children are in high-income careers, they'll pay no tax on Roth distributions — making Roth a superior inheritance vehicle. Traditional IRA distributions would be taxed at their marginal rate as they withdraw. Leaving the traditional account to spend down and passing the Roth may be the better estate move.
• Required Social Security taxation is near a threshold. Roth distributions don't count as income and don't trigger additional Social Security taxation. Using Roth to fund spending below the Social Security provisional income threshold keeps more of your SS benefit from being taxed.

The IRMAA Cliff and Withdrawal Sequencing

Medicare's IRMAA surcharges (Income-Related Monthly Adjustment Amount) trigger at MAGI thresholds and work as cliffs — one dollar over the line triggers the full surcharge for that tier. In 2026, the first IRMAA tier begins at $218,000 MAGI for married couples.⁴

When your traditional IRA distributions or RMDs are pushing MAGI toward a tier boundary, the order of your withdrawals becomes a MAGI management problem. Techniques:

• Use QCDs to replace charitable spending. A Qualified Charitable Distribution transfers IRA funds directly to charity and is excluded from MAGI entirely — unlike a normal IRA withdrawal donated afterward. The $111,000 annual QCD limit (2026³) can surgically reduce MAGI without affecting cash flow for those who give to charity.
• Substitute Roth withdrawals at the margin. If your RMD alone puts you at $210,000 MAGI and you need another $30,000 in spending, taking it from Roth keeps MAGI at $210,000. Taking it from the traditional IRA pushes you to $240,000 — crossing into IRMAA Tier 1 and adding ~$1,948/year for a couple.
• Front-load RMDs in lower-income years. You can always take more than your RMD. In years where other income is unusually low — a pension gap year, before Social Security starts — taking a larger traditional distribution (above the RMD floor) uses the available bracket space without pushing into future years with more income stacked.

Three Common Withdrawal Scenarios

Scenario 1: Traditional-heavy, no Roth

Most retirees over 70 saved when Roth IRAs didn't exist or had income limits that excluded them. A 74-year-old with $2.5M in a traditional IRA, $0 in Roth, and $30,000 in taxable accounts has no "sequence" decision — the RMD forces the income. Their planning is about minimizing RMD damage: QCDs, Roth conversions (from the IRA before the RMD is taken each year), and IRMAA management.

At this stage, the most impactful move is a Roth conversion above the RMD amount in years where tax rates allow it — using any remaining pre-72% bracket space to shift assets out of the traditional account permanently.

Scenario 2: Three-bucket retiree

A 67-year-old couple with $600K in taxable accounts, $1.8M in traditional IRA, and $400K in Roth has real sequencing choices before RMDs begin. An optimized approach: spend taxable accounts for living expenses while using the pre-RMD window to convert traditional IRA to Roth aggressively (filling the 22% bracket). Don't touch the Roth. By 73, they've reduced the traditional IRA balance and future RMDs — the taxable accounts served their purpose as a bridge to fund conversions without selling Roth.

Scenario 3: Heavy Roth, small traditional

A 70-year-old with $1.5M in Roth and $400K in traditional IRA faces a different problem: smaller RMDs, but the question of whether to draw Roth or traditional for living expenses. If their Social Security + traditional RMD covers living costs, they may not need the Roth at all — in which case the Roth can continue compounding and pass to heirs tax-free. If they need more income, Roth distributions first may minimize IRMAA and SS taxation impact. The marginal decision here often comes down to whether pulling from Roth or traditional pushes them above any income threshold.

What Changes This Calculus

The optimal withdrawal sequence depends on variables that interact in ways simple rules can't capture: your current and projected marginal rates, state tax rules, Social Security timing, whether you give to charity, your health and life expectancy, and your heirs' income levels. A retiree in California with a 13.3% state rate faces very different math than one in Texas with no state income tax.

There's no universal "right" withdrawal order for retirees with significant tax-deferred balances. What there is: a multi-year distribution model that accounts for your specific income stack, account balances, and tax situation — and optimizes the sequence accordingly.

Sources

1. IRS — Retirement Topics: Required Minimum Distributions (RMDs). RMD age 73 (75 for born 1960+); Uniform Lifetime Table divisors; Roth IRA no lifetime RMD rule.
2. IRS Revenue Procedure 2025-32 — 2026 Tax Inflation Adjustments. 2026 income tax brackets (MFJ/Single); standard deduction $32,200 MFJ, $16,100 single; additional standard deduction $1,650 per spouse 65+.
3. IRS — Qualified Charitable Distributions. 2026 QCD limit $111,000 (inflation-indexed under SECURE 2.0); available from age 70½; excludes amount from gross income.
4. CMS — 2026 Medicare Parts B Premiums and Deductibles. IRMAA thresholds and Part B surcharge amounts by income tier. First IRMAA tier begins at $218,000 MAGI for MFJ (2024 income, 2026 premiums).

Tax brackets, standard deductions, and QCD limits verified against IRS Rev. Proc. 2025-32. IRMAA thresholds verified against CMS 2026 published rates. Values confirmed April 2026.