Retirement Withdrawal Sequencing Calculator
Retirement Withdrawal Sequencing
Optimize the order of withdrawals from taxable, tax-deferred, and tax-free retirement accounts to minimize lifetime taxes paid.
Formula
Conventional Order: Taxable first, then Traditional, then Roth; Tax on Taxable = Withdrawal x Capital Gains Rate x Gain Portion; Tax on Traditional = Withdrawal x Marginal Tax Rate; Tax on Roth = $0
Frequently Asked Questions
What is the optimal withdrawal order in retirement?
The conventional approach is to withdraw from taxable accounts first, then tax-deferred accounts, and finally Roth accounts. This allows tax-free Roth assets to grow the longest. However, the optimal order depends on your specific tax situation and may vary year to year.
Why should I consider Roth withdrawals last?
Roth withdrawals are tax-free and do not count as income for Social Security taxation or Medicare IRMAA purposes. By letting your Roth grow tax-free as long as possible, you maximize the compounding benefit and preserve a tax-free resource for higher-income years.
When might I deviate from the standard withdrawal order?
Deviating may make sense when you have a low-income year where traditional withdrawals would be taxed at low rates, when you need to manage your tax bracket for IRMAA or Social Security purposes, or when you want to perform partial Roth conversions.
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