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Which account should you withdraw from first in retirement?

By Nicolas Straut
Published 6 min read

Key takeaways

  • The common retirement withdrawal order is taxable accounts first, then your 401(k) and IRA, then Roth.1 In Tweed's example household it cost $94,759 more total tax than filling the 12% bracket from the 401(k) first.
  • A tax-efficient withdrawal order takes pretax money each year up to the top of a low bracket, $100,800 of taxable income for a married couple in the 12% bracket in 2026.2 Then it spends from the brokerage account and Roth, so required distributions later have less to force out.
  • The right bracket depends on your numbers. Filling the 22% bracket left the same couple $49,928 less after tax than withdrawing from taxable accounts first, and the Tweed Retirement Withdrawal Plan runs the comparison on your own balances.
In this article

For many retirees, the order that saves the most tax takes money from the 401(k) and IRA first, up to the top of a low tax bracket, then covers the rest from the brokerage account and leaves the Roth for last. The common rule says taxable accounts first, and it can leave a 401(k) so large that required distributions push you into higher tax later. This guide shows the usual order, why it can cost more, an example with five orders, and the four steps to fill a bracket.

What is the usual retirement withdrawal order?

The usual retirement withdrawal order is your taxable brokerage and savings accounts first, then pretax accounts such as a 401(k) or traditional IRA, then your Roth IRA. The logic is deferral. Selling brokerage holdings taxes only the gain, at long-term rates of 0%, 15% or 20%, while the pretax and Roth accounts keep growing.

The rule decides which account you spend from, not how much you spend, which is what the 4% rule is for. It also ignores the tax bracket you'll be in each year.

Why withdrawing from taxable accounts first can cost more

Withdrawing from taxable accounts first can cost more because it wastes your lowest brackets in the years before Social Security and RMDs start. In Tweed's example couple, aged 65 and 63 in 2026, taxable-first owes no federal income tax for 5 years. The brokerage account runs out in 2030, and by then the 401(k) and IRA have grown to $1,143,576.

Required minimum distributions then start in 2036 at age 75, at $49,264 in the first year and more each year after.3 They stack on top of Social Security and land in the 12% bracket, and whatever is left at the end is taxed again when your heirs withdraw it. The RMD rules decide when that starts.

Tax-efficient withdrawal order: one couple, five orders compared

The couple files jointly in North Carolina with $900,000 in a 401(k) and IRA, $60,000 in Roth accounts, and $300,000 in a brokerage account. They spend $90,000 a year after tax and get $3,000 and $1,800 a month from Social Security at full retirement age. The first four rows both file at 67, so only the withdrawal order changes.

Scroll horizontally to see more columns.
Five withdrawal orders for one couple, in today's dollars
Withdrawal orderTotal taxTax left at 95After-tax money at 95First RMD
Taxable first, then 401(k) and IRA, then Roth$247,151$68,475$487,324$49,264 at 75
Fill the 12% bracket from the 401(k) and IRA$152,392$0$508,155None
Fill the 22% bracket, under the first Medicare line$177,244$0$437,396None
Fill the 22% bracket, no Medicare limit$190,895$0$404,728None
Fill the 12% bracket and both file for Social Security at 70$132,245$0$733,590None

Today's dollars. Total tax counts federal and state income tax, Medicare surcharges, and the tax still owed at 95 on what's left in the 401(k) and IRA (at 22%) and on unrealized gains. Assumes a 5% return and 2.5% inflation. Computed with the Tweed Retirement Withdrawal Plan's engine.

Filling the 12% bracket cuts total tax by $94,759 and leaves more money at 95, because the 401(k) is empty before RMDs begin. Filling the 22% bracket does worse than doing nothing. It pays 22% now on money that taxable-first would have withdrawn later at 12%, and the tax paid early loses its growth.

Compare the after-tax column, not the total: paying tax early can lower the total and still leave you with less. The last row adds a later Social Security claim at 70, which is the plan the Tweed tool picks for this couple.

How to fill a tax bracket from your 401(k) in 4 steps

Filling a tax bracket from your 401(k) means taking pretax money each year until your taxable income reaches the top of the bracket you chose, and no further. In 2026, the example couple's first year takes $101,334 from the 401(k) and IRA, converts $39,316 to Roth, and pays $17,334 in federal and state tax.

Step 1: Find your taxable income before any withdrawal

Add up pensions, interest, dividends, and the taxable part of any Social Security you already receive, then subtract your deductions. A married couple in 2026 has a $32,200 standard deduction, $1,650 more for each spouse who is 65, and up to $12,000 more from the senior deduction through 2028.

Step 2: Find the top of your target bracket

The 10% bracket ends at $24,800 of taxable income for a married couple in 2026, and the 12% bracket ends at $100,800. Single filers' brackets end at $12,400 and $50,400. Start with the 12% line, since the example shows a higher target can cost you.

Step 3: Withdraw or convert up to that line

Withdraw what you need to spend from the 401(k) or IRA, and if you're still under the line, convert the rest to Roth by December 31. The Tweed Roth Conversion Calculator shows the tax on that conversion, and the guide to Roth conversion covers the rules.

Step 4: Spend from the brokerage account and Roth for the rest

Cover any remaining spending from the brokerage account, then the Roth. Long-term gains are taxed at 0% only while taxable income stays under $98,900 for a married couple, so gains you sell on top of a full 12% bracket are taxed at 15%.

What else changes the order

Four things can move the right order away from a simple bracket fill: Social Security taxes, Medicare surcharges, your age, and your state.

Social Security taxes

Up to 85% of your Social Security becomes taxable once provisional income passes $44,000 for a married couple, and up to 50% above $32,000.4 Each IRA dollar you withdraw after you claim can make more of your benefit taxable. Withdrawing more before you claim avoids that.

Medicare surcharges

Medicare charges a surcharge on Part B and Part D premiums once joint income passes $218,000 in 2026, set from your tax return 2 years earlier.5 In the example, filling the 22% bracket with no Medicare limit crossed that line in 4 years and left $32,669 less than staying under it. The 2026 IRMAA brackets list every line.

Retiring before 59½

Withdrawals from an IRA before age 59½ usually carry a 10% additional tax on top of income tax. Before then, spending from the brokerage account first is often the right call. Medicare also starts at 65, so marketplace health coverage before then can change how much income you want to show.

State income tax

Some states don't tax income at all, and others exempt part of your retirement income, so the same withdrawal can cost different amounts in two states. If you plan to move, withdrawing more in the lower-tax state can save money. The table of state taxes on retirement income shows how the most searched states treat Social Security, pensions and IRA withdrawals. Florida has no personal income tax, and California taxes IRA withdrawals at the same rates as wages.Virginia exempts Social Security, and its age deduction shrinks as your other income rises, so the size of each IRA withdrawal matters there.

The Tweed Retirement Withdrawal Plan runs these trade-offs on your own balances. It searches bracket targets, the Medicare limit, and each spouse's claiming age, then shows the tax saved vs withdrawing from taxable accounts first. This year's withdraw and convert decisions are free, and the year-by-year plan is paid.

For market risk, the Tweed Monte Carlo Retirement Calculator tests the same savings against bad years, and sequence of returns risk explains why the early years matter most. The Tweed RMD Calculator shows the RMDs you'd face without a plan.

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Frequently asked questions about retirement withdrawal order

Should you withdraw from your Roth IRA first?

No, you usually shouldn't withdraw from your Roth IRA first. A Roth grows tax free, qualified withdrawals add nothing to your taxable income, and the owner never has to take required distributions. That makes it the account to spend last, or to use in a single year when an extra withdrawal would push you over a bracket or Medicare line.

Is it better to withdraw from all accounts at once?

Withdrawing from all accounts at once, in proportion to their balances, spreads taxable income evenly across retirement. It is simpler than filling a bracket, but it does not aim at a bracket line, so it can leave room in a low bracket unused or push income over a Medicare line. Compare both on your own balances before choosing.

Do you have to take money from a 401(k) before RMDs start?

No, you don't have to take money from a 401(k) before RMDs start at age 73 or 75, depending on your birth year. You can, though, and from age 59½ there is no 10% additional tax. Withdrawing in the years before RMDs is how you shrink the balance that required distributions will later force out.

How much can you withdraw from an IRA and stay in the 12% bracket?

A married couple filing jointly, both 65 or older and with no other taxable income, can withdraw about $148,300 from an IRA in 2026 and stay in the 12% bracket. That is the $32,200 standard deduction, $3,300 of age-65 add-ons, the $12,000 senior deduction and the $100,800 top of the bracket.

Does the withdrawal order change if you plan to leave money to heirs?

Yes, the withdrawal order can change if you plan to leave money to heirs. Most heirs who inherit a 401(k) or IRA must empty it within 10 years and pay income tax at their own rate, while qualified Roth money passes to them tax free. If your heirs earn more than you, filling your brackets now saves them tax later.

Sources

  1. https://www.fidelity.com/viewpoints/retirement/tax-savvy-withdrawals
  2. https://www.irs.gov/pub/irs-drop/rp-25-32.pdf
  3. https://www.irs.gov/publications/p590b
  4. https://www.irs.gov/publications/p915
  5. https://www.cms.gov/newsroom/fact-sheets/2026-medicare-parts-b-premiums-deductibles

The example uses one household and fixed assumptions: a 5% return, 2.5% inflation, and a plan that runs until the younger spouse is 95. Tax figures are for 2026 and are indexed for later years.

Tweed provides educational estimates, not financial advice. Nicolas Straut is a personal finance writer, not a financial advisor. Confirm your specific situation with a qualified financial professional.

Nicolas Straut
Nicolas Straut

Personal finance writer, former Forbes contributor and This Week in Fintech writer. He isn't a financial advisor or a CPA.

nicstraut.com

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