The account you spend from first changes what you keep
Most retirees end up holding money in three places that are taxed nothing alike: a taxable brokerage account, a tax-deferred account like a traditional 401(k) or IRA, and a Roth IRA. Each dollar spent from each account carries a different tax cost, so the order you draw them down in isn't a minor bookkeeping choice. Run the numbers on the same portfolio in a different sequence and the lifetime tax bill can move by tens of thousands of dollars.
This is a question with a well-established default answer and a well-established exception. Both matter, and most of the confusion comes from treating the default as a rule instead of a starting point.
The standard sequence: taxable, then tax-deferred, then Roth
The conventional order, and the one Fidelity lays out in its retirement income guidance, is to spend taxable brokerage accounts first, tax-deferred accounts second, and Roth accounts last. Fidelity's stated reasoning is that this order gives your tax-deferred and Roth balances more time to grow before you touch them.
There's a second reason that matters just as much: what's actually taxed, and at what rate.
Taxable brokerage withdrawals. Selling shares in a taxable account only taxes the gain, not the full amount, and only at long-term capital gains rates if you've held the position more than a year. Your original contribution (your cost basis) comes back to you tax-free.
Tax-deferred withdrawals (traditional 401(k), traditional IRA). Every dollar you pull out is taxed as ordinary income, the same rate schedule that applies to a paycheck. There's no basis to subtract and no preferential rate.
Roth withdrawals. Qualified withdrawals are entirely tax-free. You already paid the tax before the money went in.
Spending the taxable account first means paying the lowest available rate (capital gains, often 0%) while the money in the other two accounts keeps compounding. It also delays the day you start pulling ordinary income out of the tax-deferred account. Capital gains rates top out at 20% federally, while ordinary income rates climb through seven brackets up to 37%, so a dollar taxed as a long-term gain is frequently cheaper than the same dollar taxed as ordinary income, sometimes free.
Bogleheads forum members who work through this question in detail tend to land on a caveat worth taking seriously: the taxable-then-deferred-then-Roth order is a reasonable default, not a universal rule. The right sequence depends on your specific mix of account balances, other income, and how many years stand between retirement and when Social Security and required distributions start.
RMDs put a clock on the tax-deferred account
Roth accounts don't force your hand. Traditional accounts do, eventually.
Under the SECURE 2.0 Act, the IRS requires you to start taking required minimum distributions, RMDs, from traditional 401(k)s and IRAs starting at age 73. That age moves to 75 starting in 2033, per the IRS's published retirement plan guidance. Skip an RMD and the IRS can assess an excise tax on the amount you should have withdrawn.
This is the boundary that makes "just wait as long as possible" an incomplete strategy for the tax-deferred account. You can defer taxable and Roth withdrawals indefinitely if your finances allow it, but the tax-deferred account eventually forces income onto your return whether you want it there or not, on top of whatever else you're earning that year, including Social Security.
The exception: using the gap years before Social Security and RMDs
The years between when you stop working and when Social Security and RMDs begin are often the lowest-income years of your entire retirement. Spending purely from the taxable account during those years, as the standard order suggests, can leave that window empty. Filling it instead, either with extra traditional withdrawals or Roth conversions timed to your lowest tax brackets, is the most common deviation from the default sequence, and it's the subject of a large share of the withdrawal-order discussion on Bogleheads.
The reason to fill the gap rather than leave it empty comes down to what happens once Social Security and RMDs both show up on the same return. Up to 85% of Social Security benefits can become taxable depending on your other income, and every additional dollar from an RMD can push more of that benefit into taxable territory at the same time. Kiplinger has reported on this stacking effect, sometimes called the tax torpedo: one Kiplinger column cited an analysis where a retiree's marginal rate on an additional dollar of ordinary income reached 40.7% once Social Security taxation and bracket effects were layered together, even though the retiree's stated bracket was a much lower 22%.
Paying tax at a known, low rate during the gap years, rather than an unknown and potentially much higher rate once RMDs and Social Security overlap, is the entire case for deviating from the standard order. If you want the mechanics of doing this as a structured, multi-year conversion strategy, Roth conversion ladders covers the bracket math and the five-year access rules in detail.
A worked example: three years, two strategies
Consider a single retiree, Denise, who retires at 65 with:
- $200,000 in a taxable brokerage account (cost basis $120,000, so $80,000 is unrealized long-term gain)
- $650,000 in a traditional IRA
- $130,000 in a Roth IRA
She needs $60,000 a year to live on and Social Security won't start until 68, giving her three clean gap years with no other income.
Strategy A: taxable account only, standard order, no bracket-filling.
Each year she sells $60,000 worth of brokerage holdings. Because 40% of the account is gain, $24,000 of each $60,000 sale is a taxable long-term capital gain and $36,000 is a tax-free return of basis. For 2026, the IRS's 0% long-term capital gains bracket for single filers covers taxable income up to $49,450. Her $24,000 gain sits well inside it. Across all three years, her federal tax bill is $0.
Strategy B: same taxable spending, plus filling the empty tax brackets.
She spends the same $60,000 a year from the brokerage account, still owing $0 on that piece. But instead of leaving the 10% and 12% brackets empty, she also withdraws or converts money from the traditional IRA up to the top of the 12% bracket each year. For 2026, the single standard deduction is $16,100 and the 12% bracket runs through $50,400 of taxable income, so she can move $66,500 out of the traditional IRA before spilling into the 22% bracket. The tax on that: 10% on the first $12,400 ($1,240) plus 12% on the remaining $38,000 ($4,560), for $5,800 a year, an effective rate of 8.7%.
Over the three gap years, Strategy B moves $199,500 out of the traditional IRA at a total federal cost of $17,400.
The alternative is leaving that $199,500 inside the traditional IRA instead of moving it during the gap years, letting it keep growing until RMDs begin at 73, eight years after she retires, by which point Social Security is also on the return. Assuming continued growth (an assumption, not a promise, since actual returns vary year to year) that balance shows up later as a larger RMD, taxed as ordinary income and stacked with Social Security in exactly the way Kiplinger's tax-torpedo reporting describes. There's no way to know Denise's exact future marginal rate today, but paying 8.7% now on money that would otherwise sit in a bracket where Social Security taxation is actively working against her is the trade the exception case is built on.
It also affects what's exposed to market risk
Which account you draw down first doesn't only change your tax bill. It changes which assets are still exposed to the market while you're taking withdrawals. If your taxable account is heavier in bonds and cash while your tax-deferred and Roth accounts hold most of your equities, spending the taxable account first during a market downturn means selling stable assets while your growth assets recover untouched. Sequence of returns risk covers why the order and timing of withdrawals matters as much as the average return you earn, and it's worth reading alongside your account-order decision rather than separately from it.
If you're retiring before 59½, the taxable account also does double duty as your bridge fund. The net worth you need to retire at 55 walks through sizing that bridge so the standard withdrawal order doesn't collide with early-withdrawal penalties on the accounts you're not supposed to touch yet.
Seeing how much sits in each account type, and how that mix shifts as you spend it down, is easier when your balances are tracked by category rather than scattered across statements. That's part of what a tool like Steady Wealth (steadywealth.app) is for: keeping the account-type breakdown visible so a withdrawal-order decision is based on your actual numbers, not a guess.
Frequently asked questions
What order should I withdraw retirement accounts in?
The standard default is taxable brokerage accounts first, tax-deferred accounts (traditional 401(k), traditional IRA) second, and Roth accounts last. This order pays the lowest available tax rate first and gives your tax-deferred and Roth balances the most time to compound before you touch them. It's a reasonable starting point for most people, but the years before Social Security and required minimum distributions begin are often better used to withdraw some traditional-account money or convert it to Roth at low rates rather than leaving those brackets empty.
Should I do Roth conversions before RMDs start?
For many retirees with a large traditional balance and several low-income years before Social Security or RMDs begin, converting some of that balance to Roth during the gap years can reduce lifetime tax compared to waiting until RMDs force the withdrawal. The right amount to convert depends on your other income, your current bracket, and how large your eventual RMDs would otherwise be. Roth conversion ladders walks through the year-by-year mechanics.
Does everyone need to follow the same withdrawal order?
No. The standard order assumes a retiree with meaningful balances in all three account types and no unusual income sources. Someone with a pension, rental income, or a very small taxable account may have little room to benefit from bracket-filling, while someone with a large traditional balance and years of low income before Social Security has more to gain from deviating. Bogleheads forum discussions on this topic consistently land on the same point: model your specific numbers rather than applying a rule of thumb uniformly.
What happens if I don't take my RMD?
The IRS requires RMDs from traditional 401(k)s and IRAs starting at age 73 (moving to 75 in 2033 under the SECURE 2.0 Act) and can assess an excise tax on any amount you should have withdrawn but didn't. RMDs apply regardless of whether you need the money to live on, which is one reason some retirees choose to draw down the traditional account earlier, on their own terms, rather than waiting for the forced schedule.
Does the withdrawal order matter if my traditional balance is small compared to my taxable and Roth balances?
Less than it does for someone with a large traditional balance. If most of your net worth sits in taxable or Roth accounts, RMDs will be smaller and the tax-torpedo risk from stacking a large RMD with Social Security is lower. The core logic (spend the account taxed at the lowest rate first) still applies, but the stakes of getting the sequencing exactly right are smaller when the tax-deferred pool itself is smaller.
Can I just spend from whichever account is most convenient?
You can, but it usually costs more in lifetime taxes than following a deliberate order. The tax code treats withdrawals from each account type completely differently, so a "whichever account is easiest" approach tends to pull ordinary-income money out earlier than necessary or leave capital-gains-taxed money compounding when it could have been spent at a lower rate. A few minutes of planning around the standard order and its exception is usually worth more than the convenience of not thinking about it.