What Order Should You Withdraw From Retirement Accounts?

Most retirees end up with savings spread across a few different account types — a taxable brokerage account, a tax-deferred account like a Traditional 401(k) or IRA, and sometimes a Roth account. Which one you draw from first, second, and last can meaningfully change how much of your money ends up going to taxes over a multi-decade retirement.

A commonly used default order

1. Taxable brokerage accounts first. Withdrawals here are typically taxed only on the gains (often at lower long-term capital gains rates), not the full amount, and spending these down first gives tax-deferred and Roth accounts more time to keep compounding.
2. Tax-deferred accounts next (Traditional 401(k)/IRA). These withdrawals count as ordinary income, so many retirees try to draw them down steadily — enough to fill up lower tax brackets each year — rather than in one lump sum.
3. Roth accounts last. Since qualified Roth withdrawals are tax-free and aren't subject to required withdrawals during the original owner's lifetime, letting a Roth balance compound tax-free for as long as possible is usually the highest-value option, making it a good final resource — and a strong asset to potentially leave to heirs.

Why "first, second, last" isn't a rigid rule

This order is a reasonable default, not a law of nature. A retiree in a very low tax bracket might intentionally pull some money from a tax-deferred account earlier, to "fill up" a low bracket before required withdrawals force larger, less flexible distributions later at a potentially higher rate. Health insurance subsidies, which are often tied to reported income, can also make the taxable-first approach more or less attractive depending on your total income picture. This is exactly the kind of trade-off worth reviewing with a tax professional, since it depends heavily on your specific bracket, state taxes, and other income sources.

Required withdrawals add a wrinkle

Tax-deferred accounts are generally subject to required minimum withdrawals starting at a certain age, which can force income (and taxes) whether or not you actually need the cash that year. Some retirees plan smaller, voluntary withdrawals from tax-deferred accounts in the years before these kick in, specifically to soften that later jump.

Plan the accumulation phase with the drawdown phase in mind

Because withdrawal order matters this much, it's worth thinking about account mix well before retirement — not just how much you're saving, but which account types. Our retirement and FIRE calculator focuses on the accumulation side (projecting whether your total savings and contributions get you to your goal); pairing that projection with a withdrawal strategy is the next step once you're getting close to retirement.

This article is for educational purposes only and is not tax or financial advice. Tax rules, brackets, and required withdrawal ages change and vary by individual circumstances — consult a licensed tax advisor or financial planner before setting a withdrawal strategy.