By John F. Davenport, Esq. | Davenport & Associates, Norwalk, CT | April 30, 2026
You have spent decades saving for retirement across multiple accounts: a 401(k) or traditional IRA, a Roth IRA, maybe a brokerage account, and eventually Social Security. Now comes the question nobody prepared you for: which retirement accounts do you pull money from first?
The answer to this question can mean the difference between paying $5,000 in federal taxes per year and paying $15,000. Over a 25 to 30 year retirement, that gap compounds into hundreds of thousands of dollars. And yet most retirees either follow oversimplified rules of thumb or make the decision without any tax modeling at all.
The conventional wisdom says to withdraw from taxable accounts first, then tax-deferred accounts, then Roth accounts last. That sequence is not wrong in every situation, but it is incomplete. For many retirees, a blended approach that strategically draws from multiple accounts each year will produce significantly better results.
As both a financial advisor and a licensed attorney, I help families build withdrawal strategies that coordinate across all of these accounts, Social Security, Medicare premiums, and the new tax provisions in the OBBBA. Let me walk you through how the three buckets work, why the conventional order often fails, and how to build a smarter strategy.
Before you can build a withdrawal strategy, you need to understand the tax treatment of each type of account.
These are your regular investment accounts. You funded them with after-tax dollars. When you sell investments, you pay capital gains taxes on the profits. Long-term capital gains (on assets held more than one year) are taxed at 0, 15, or 20 percent depending on your income. Short-term gains are taxed at ordinary income rates. Dividends and interest earned inside these accounts are also taxable each year.
The key advantage: you have already paid tax on the money you put in. The key consideration: selling large positions with low cost basis can create a big capital gains hit in a single year.
You got a tax deduction when you contributed, and the money grew tax-free. But every dollar you withdraw is taxed as ordinary income, at your marginal rate. Starting at age 73, you must take Required Minimum Distributions (RMDs) whether you need the money or not. RMDs are calculated based on your account balance and an IRS life expectancy factor. The penalty for missing an RMD is 25 percent of the amount you should have withdrawn.
The key advantage: decades of tax-deferred growth. The key risk: if your tax-deferred balances grow too large, your RMDs can push you into higher tax brackets and trigger Medicare IRMAA surcharges.
You contributed after-tax dollars. The money grows tax-free, and qualified withdrawals are completely tax-free. There are no RMDs for Roth IRAs during the original owner’s lifetime. Roth accounts are also highly efficient to pass to heirs because the beneficiaries pay no income tax on withdrawals.
The key advantage: total tax flexibility. You can withdraw any amount without increasing your taxable income, your Social Security taxation, or your Medicare premiums. The key consideration: Roth dollars are the most valuable dollars you have. Using them too early when you have other options can be a costly mistake.
The standard advice has been around for decades: spend your taxable accounts first, then draw down your tax-deferred accounts, then use Roth accounts last. The logic is straightforward: let the tax-advantaged accounts grow as long as possible.
This approach works reasonably well for people with simple financial lives and moderate account balances. But for most retirees, especially those with significant pre-tax retirement assets, this conventional sequence creates problems.
| The Three Problems with the Conventional Order 1. It lets tax-deferred balances grow unchecked, leading to larger RMDs later that push you into higher brackets. 2. It ignores the opportunity to do Roth conversions in low-income years before RMDs begin. 3. It does not account for the cascading effects of higher income: more Social Security is taxed, Medicare premiums increase through IRMAA, and the new $6,000 senior deduction phases out. |
| Not Sure Which Accounts to Draw From First? John F. Davenport, Esq. and Davenport & Associates help CT and NY families locally, as well as clients all across the country, build tax-efficient withdrawal strategies that coordinate across all account types. Click below to schedule your free 30-minute consultation. -> Schedule a Free Review -> jdavenportassociates.com/contact-us |
Instead of following a rigid sequence, a better approach is to set a target tax bracket each year and fill it strategically using a combination of accounts.
Here is how it works in practice:
Add up your Social Security benefit, any pension income, and any other fixed income. This is your baseline taxable income before you touch any accounts.
Under the OBBBA, the 2026 federal tax brackets are permanently set. For a married couple filing jointly, the 22 percent bracket covers taxable income from $96,951 to $206,700. Many retirees find that filling this bracket, but not spilling into the 24 percent bracket, is the sweet spot.
If your guaranteed income leaves room in the 22 percent bracket, consider taking additional withdrawals from your traditional IRA or doing a Roth conversion up to the top of that bracket. This reduces your future RMDs, moves money into a tax-free account, and takes advantage of today’s known rates.
If you need more income beyond what your bracket-filling strategy provides, draw from taxable accounts. Long-term capital gains in the 0 percent bracket (taxable income under $96,700 for married couples in 2026) are tax-free. This can be a powerful tool if your ordinary income is managed carefully.
Use Roth withdrawals in years when you have an unexpected expense (a new roof, a medical bill, a car) or when you need to keep your income below a critical threshold like an IRMAA cliff or the senior deduction phase-out.
The right withdrawal strategy is not just about tax brackets. There are five income thresholds that can dramatically change your effective tax rate.
Up to 85 percent of your Social Security benefit can be taxed. For married couples, provisional income (AGI + nontaxable interest + half of Social Security) above $44,000 triggers the 85 percent inclusion. Every dollar of IRA withdrawal above this level effectively creates a “tax torpedo” where the marginal rate on that dollar is much higher than the bracket rate alone.
If your Modified Adjusted Gross Income exceeds $109,000 (single) or $218,000 (joint), your Medicare Part B and Part D premiums increase through Income-Related Monthly Adjustment Amounts. IRMAA is based on income from two years prior. A large IRA withdrawal or Roth conversion in 2026 can increase your Medicare premiums in 2028. These are cliff-based thresholds, meaning crossing by even one dollar triggers the full surcharge for the entire year.
The new senior bonus deduction phases out starting at $75,000 (single) or $150,000 (joint) MAGI. For every dollar above the threshold, the deduction is reduced by 6 cents. Managing your withdrawal amounts to stay below these thresholds can preserve up to $6,000 per person in additional deductions.
The 3.8 percent Net Investment Income Tax applies when your MAGI exceeds $200,000 (single) or $250,000 (joint). Large IRA withdrawals or capital gains realizations can push you over this threshold.
Married couples with taxable income under $96,700 in 2026 pay zero federal tax on long-term capital gains and qualified dividends. If your ordinary income is managed carefully through bracket-filling, you can harvest capital gains from your taxable account completely tax-free.
One of the biggest mistakes retirees make is avoiding withdrawals from tax-deferred accounts until they are forced to take RMDs at age 73. By that point, the account has often grown so large that the mandatory withdrawals create a cascade of problems.
Large RMDs push you into higher brackets. They increase the amount of Social Security that is taxed. They can trigger IRMAA surcharges. They can eliminate the senior bonus deduction entirely. And when one spouse dies, the surviving spouse files as a single taxpayer with narrower brackets, making the problem even worse.
The solution is to start strategic withdrawals or Roth conversions in the years between retirement and age 73. These years are often the lowest-income years of your retirement, and they represent a limited window to move money out of tax-deferred accounts at favorable rates before RMDs begin.
If you are 70 and a half or older and make charitable donations, a Qualified Charitable Distribution (QCD) allows you to send up to $105,000 per year directly from your IRA to a qualifying charity. The distribution counts toward your RMD but is excluded from your taxable income. This is one of the most tax-efficient giving strategies available, and it directly reduces the cascading effects of higher income on Social Security taxation and IRMAA.
These are the questions I hear most from clients planning their withdrawal strategy.
| Q: Should I always withdraw from taxable accounts first? Not necessarily. The conventional order (taxable, then tax-deferred, then Roth) ignores the opportunity to do Roth conversions in low-income years and can lead to larger RMDs later. A blended approach that fills a target tax bracket each year is usually more efficient. |
| Q: Do Roth withdrawals affect my Medicare premiums? No. Qualified Roth IRA distributions are not included in MAGI for IRMAA purposes. This makes Roth accounts an excellent tool for managing income in years when you need to stay below an IRMAA threshold. |
| Q: What happens if I do not take my RMD? The penalty is 25 percent of the amount you should have withdrawn. If corrected promptly, the penalty may be reduced to 10 percent. RMDs begin at age 73 (rising to 75 in 2033). Your first RMD can be delayed until April 1 of the following year, but doing so means taking two RMDs in one year, which can create a large tax hit. |
| Q: Can I do a Roth conversion after I start taking RMDs? Yes. You must take your RMD first for the year, but you can convert additional amounts above the RMD into a Roth IRA. The conversion amount is taxable, so it needs to be modeled carefully to avoid crossing IRMAA thresholds or the senior deduction phase-out. |
| Q: How does the withdrawal order change when one spouse dies? Significantly. The surviving spouse moves to single-filer brackets, which are roughly half as wide. The same income that was taxed at 22 percent as a couple may be taxed at 24 or 32 percent for a single filer. This is sometimes called the “survivor’s penalty.” Planning for this shift while both spouses are alive, through Roth conversions and strategic drawdowns, can save the surviving spouse tens of thousands of dollars. |
| Q: What is a Qualified Charitable Distribution (QCD)? A QCD allows IRA owners age 70 and a half or older to donate up to $105,000 per year directly from their IRA to a qualifying charity. It counts toward your RMD but is excluded from taxable income. It is one of the most tax-efficient ways to give because it reduces your AGI, which in turn can lower Social Security taxation, IRMAA surcharges, and the senior deduction phase-out. |
The order in which you withdraw from your retirement accounts is not a simple formula. It is a year-by-year decision that depends on your tax brackets, your Social Security income, your Medicare premium thresholds, your RMD schedule, and your goals for your heirs.
The conventional wisdom of “taxable first, tax-deferred second, Roth last” is a starting point, but for most families, a bracket-based blended strategy will produce significantly better results. The years between retirement and age 73 are especially critical, because they represent a window to convert pre-tax money to Roth at favorable rates before RMDs force your hand.
If you are within 10 years of retirement or already retired and have not modeled your withdrawal strategy, now is the time. The tax decisions you make today compound over decades. Getting them right from the start is worth far more than trying to fix them later.
| Questions About Your Retirement Withdrawal Strategy? John F. Davenport, Esq. and the team at Davenport & Associates help CT and NY families locally, as well as clients all across the country, model tax-efficient withdrawal sequences, coordinate Roth conversions with RMD planning, and build retirement income strategies designed to minimize lifetime taxes. Click below to schedule your free 30-minute consultation. -> Schedule Your Free Consultation -> jdavenportassociates.com/contact-us |
| References & Sources Fidelity Investments: Tax-Savvy Withdrawals in Retirement (fidelity.com) Morningstar: Retirement Withdrawal Sequencing Rules of the Road, March 2026 (morningstar.com) Greenbush Financial Group: Tax-Efficient Retirement Withdrawals 2026 (greenbushfinancial.com) IRS: Required Minimum Distributions FAQs (irs.gov) IRS: 2026 Tax Brackets, Revenue Procedure 2025-32 (irs.gov) Medicare.gov: 2026 IRMAA Thresholds (medicare.gov) |
| About the Author | John F. Davenport, Esq. John F. Davenport holds a law degree from Pace University and an MBA in finance from Fordham University, and his business degree from the University of Notre Dame. He is a licensed attorney in New York and Connecticut, and financial advisor. He founded Davenport & Associates in 1997 and has spent more than 30 years helping CT and NY families build retirement income plans and estate strategies that work together — not against each other. As both a licensed attorney and financial advisor, John reviews estate plans from both the legal and financial perspective in a single conversation — a combination most families would otherwise need two separate professionals to replicate. Davenport & Associates | 800 Connecticut Avenue, Suite E401, Norwalk, CT 06854 Phone: (203) 853-6300 | jdavenportassociates.com IMPORTANT DISCLAIMER: Educational only—not investment/tax/legal advice. No strategy guarantees results—vary by rates, markets, laws, personal circumstances. Consult advisors. |