Retirement
Retirement Withdrawal Order: Which Accounts People Often Draw From First and What Changes the Answer
The short answer
Retirement withdrawal order is the sequence in which a household draws from taxable, pre-tax, and Roth accounts to fund spending. Each account type is taxed differently, so no single sequence fits every household. The answer may depend on tax brackets, Medicare premium thresholds, Social Security taxation, and required minimum distributions.
How are taxable, pre-tax, and Roth accounts taxed when money comes out?
Taxable accounts. Money withdrawn from a taxable brokerage account is generally not taxed as a withdrawal. Tax comes from what the account produces and from what is sold to raise cash. Interest and dividends are reported in the year received, and the IRS explains that selling an asset for more than its basis produces a capital gain, which is long-term when the asset was held more than one year. Net long-term capital gain may be taxed at 0%, 15%, or 20% depending on overall taxable income, while net short-term gain is taxed as ordinary income. Source: IRS, Topic no. 409, Capital gains and losses, reviewed November 8, 2026.
Pre-tax accounts. Withdrawals from traditional IRAs and workplace plans are included in taxable income, except for any part that was already taxed (basis). Source: IRS, Retirement topics, Required minimum distributions (RMDs), reviewed November 8, 2026.
Roth accounts. The IRS states that qualified distributions from a Roth IRA are tax-free when the requirements are met. Distributions that are not qualified can have different treatment, so the rules for the specific account matter. Source: IRS, Roth IRAs, reviewed November 8, 2026. The Roth conversion guide explains the five-year periods and conversion rules in more detail.
The table below uses round, made-up numbers to show how the same $10,000 withdrawal can appear on a return in different ways. It is not a projection and does not describe any person, account, or tax result.
| Account type | Illustrative withdrawal | Illustrative amount reported as income | Why it differs |
|---|---|---|---|
| Taxable account (assets sold) | $10,000 | $3,000 | Only the gain is reported. The other $7,000 is assumed to be basis. |
| Pre-tax IRA (no basis) | $10,000 | $10,000 | The full withdrawal is generally included in taxable income. |
| Roth IRA (qualified distribution) | $10,000 | $0 | A qualified distribution is not included in income. |
Why does the answer depend on a household's tax brackets?
The IRS explains that income is taxed in layers called brackets, and that moving into a higher bracket applies the higher rate only to the part of income that falls in that bracket. For 2025, the federal rates on ordinary income run from 10% to 37%, with bracket ranges that differ by filing status and change each year. Source: IRS, Federal income tax rates and brackets, reviewed November 8, 2026. Confirm the current year's ranges with the IRS before relying on them.
A pre-tax withdrawal adds ordinary income, so a larger withdrawal in one year can reach higher brackets than a smaller one. A withdrawal from a Roth account or from basis in a taxable account adds little or no income. That is why households often compare expected taxable income across several years instead of looking at a single year. The AGI vs taxable income explainer shows which figure brackets use and which figure many other thresholds use.
Each approach has a trade-off. Drawing from a pre-tax account earlier may use lower brackets in some years, but it brings tax forward and reduces the balance that could keep growing. Drawing from a taxable account first may keep reported income low for a time, but it can leave a larger pre-tax balance that later produces larger required distributions. Future income, account values, and tax law cannot be known in advance, so a sequence that looks reasonable today may not turn out that way.
State tax is part of the picture for some households. The Texas Comptroller reports that Texas has no state income tax, so a Texas resident's withdrawals are not taxed by the state, although federal tax still applies. Residents of other states, or people who move, should review their own state's rules. Source: Texas Comptroller, Texas is open for small business (December 2025), reviewed November 8, 2026.
How can withdrawals affect Social Security taxation and Medicare premiums?
Social Security. The IRS states that benefits are not taxable unless the sum of modified adjusted gross income (MAGI) plus one half of the benefits received in the year is more than the base amount for the filing status. Pre-tax withdrawals and realized capital gains add to MAGI, so they can increase the part of benefits that is taxed, while a qualified Roth distribution is not included in income. The base amounts differ by filing status. Source: IRS, Topic no. 423, reviewed November 8, 2026.
Medicare. The Social Security Administration adds an income-related monthly adjustment amount to Medicare Part B and prescription drug premiums for higher-income beneficiaries. For 2026 premiums, the first tier applies when MAGI is above $109,000 for most filers, or above $218,000 for married couples filing jointly, with additional tiers at higher income. The agency uses the most recent federal tax return the IRS provides to it, which is generally the return filed in 2025 for tax year 2024. For this purpose MAGI is adjusted gross income plus tax-exempt interest. Source: Social Security Administration, Premiums: Rules for Higher-Income Beneficiaries, reviewed November 8, 2026.
The same page describes a process to ask for a new decision after certain life-changing events that reduce income, such as retirement. Thresholds and premium amounts change each year, and a withdrawal made this year can affect premiums set two years later. These effects are reasons to estimate income before choosing which account to draw from, not reasons to avoid any particular account.
How do required minimum distributions limit the choices?
The IRS states that people generally must start taking withdrawals from traditional IRAs, SEP IRAs, SIMPLE IRAs, and workplace retirement plan accounts at age 73. Participants in a workplace plan can generally delay until the year they retire unless they own 5% or more of the sponsoring business. The first distribution can be delayed until April 1 of the following year, which can mean two distributions in one tax year. Sources: IRS, Retirement plan and IRA required minimum distributions FAQs and IRS, Required minimum distributions (RMDs), reviewed November 8, 2026.
The starting age is scheduled to change by birth year. The Congressional Research Service reports that, under SECURE 2.0, the age is 75 for people who turn 73 after December 31, 2032, which generally means people born in 1960 or later. Source: Congressional Research Service, Required Minimum Distribution (RMD) Rules for Original Owners of Retirement Accounts, reviewed November 8, 2026. A tax professional can confirm the age that applies to a specific birth year.
Required withdrawals matter for ordering because they come first in practice. The IRS states that the amount not withdrawn may be subject to an excise tax of 25%, or 10% if corrected within two years, that a distribution above the minimum can be taken, and that an excess in one year cannot be applied to a later year. Roth IRAs do not require withdrawals during the owner's lifetime. Source: IRS, Retirement plan and IRA required minimum distributions FAQs, reviewed November 8, 2026.
The trade-off is straightforward. Leaving pre-tax accounts untouched for many years can leave a larger balance subject to required distributions, and those distributions are included in taxable income whether or not the household needs the cash. Taking pre-tax withdrawals earlier can reduce that balance, but it adds taxable income sooner.
What other factors can change the answer?
Spending needs and cash reserves. How much a household needs each year, and how much it holds in cash, affects which accounts it must draw from and whether it has to sell investments at an inconvenient time. Selling assets in a taxable account can also change the mix of investments, which is a separate question from taxes.
Age and account rules. Rules for distributions before age 59½, and for workplace plans compared with IRAs, differ. IRS Publication 590-B explains the rules for IRA distributions, and a plan administrator can explain a workplace plan's rules.
Roth conversions. Some households review converting part of a pre-tax balance in years with lower income. A conversion adds taxable income in the year it occurs, cannot be reversed, and can affect Medicare premiums and Social Security taxation, so it interacts with withdrawal order. See the Roth conversion guide for the trade-offs.
Beneficiaries and legacy goals. For most people who inherit a retirement account after 2019, the IRS states that the entire balance must generally be distributed within ten years, with exceptions for certain beneficiaries. Which accounts are spent first can change what is left for heirs and how it is taxed. Source: IRS, Retirement plan and IRA required minimum distributions FAQs, reviewed November 8, 2026.
Spouses. Joint returns combine income, and a spouse's age, benefits, and accounts can change which thresholds apply and when required distributions begin.
Why is there no single order that fits every household, and how often is it reviewed?
Withdrawal order is a set of trade-offs rather than a rule. An approach that reduces tax in one year can raise it in another, and an approach that protects a Medicare threshold this year can leave a larger required distribution later. The right balance depends on income, account mix, health, longevity expectations, legacy goals, and tax law, and none of these stay fixed.
Because of that, many households review the plan each year, usually before year end, when current income, required distributions, and thresholds can be compared with the prior year's return. The calculators page offers estimation aids, and a calculator result is an estimate based on the inputs entered, not a prediction. This article is general education and does not recommend any sequence.
Questions to bring to a planner and a CPA
1. Which of my accounts are taxable, pre-tax, and Roth, and what is the balance and basis of each?
2. How much income do I expect this year and in the next several years, including pensions, Social Security, and required distributions?
3. Which federal bracket would the last dollars of my taxable income fall in under different withdrawal choices?
4. How would each choice change my AGI and MAGI, and which thresholds use those figures?
5. How close am I to a Medicare income-related premium threshold, and which year's return will be used?
6. How would each choice change the taxable share of my Social Security benefits?
7. When do required minimum distributions begin for me, and how large might they be if pre-tax balances are left untouched?
8. If I sell assets in a taxable account, what are the holding periods and the gains or losses?
9. Does a Roth conversion in a lower-income year fit alongside my withdrawals, and what are its costs and limits?
10. How will we revisit the order each year, and who coordinates the information between my planner and my CPA?
This checklist is educational. It does not decide what is appropriate for any household, and results depend on individual circumstances and current law.
Next steps and related planning resources
Withdrawal order sits at the point where retirement income, taxes, and benefits meet. The retirement planning page describes how Ankerstar Wealth approaches retirement income and Social Security and Medicare timing, and the tax planning page describes its approach to tax planning questions. The Roth conversion guide and the AGI vs taxable income explainer cover two related decisions. If you would like to talk through how these topics fit a specific household, you are welcome to make an inquiry through the contact page.
The opinions expressed here are those of the advisor and are not personal financial, tax, or legal advice. Tax rules and thresholds change, and results depend on individual circumstances. Consult a qualified tax professional before acting.
This article is general information, not personalized investment, tax, or legal advice. Your situation is specific to you — talk to a qualified professional before acting on anything here.
Frequently asked questions
What is retirement withdrawal order?
Retirement withdrawal order is the sequence in which a household draws from its taxable, pre-tax, and Roth accounts to fund spending. Because each account type is taxed differently, the sequence can affect taxable income, Social Security taxation, and Medicare premiums. It depends on individual circumstances and current law.
Is there one order of withdrawal that works for every household?
No. Each approach has trade-offs. An order that lowers tax in one year can raise it in another, and results depend on tax brackets, account balances, required distributions, benefits, and future tax law. A qualified tax professional can review how the options apply to a specific household.
Can retirement withdrawals affect Medicare premiums and Social Security taxes?
They can. Pre-tax withdrawals and realized gains add to adjusted gross income. The Social Security Administration uses modified adjusted gross income from a tax return filed earlier to set income-related Medicare premiums, and the IRS uses modified adjusted gross income plus one half of benefits to decide whether Social Security benefits are taxable (SSA and IRS, reviewed November 8, 2026).
When do required minimum distributions begin?
The IRS states that withdrawals from traditional IRAs and most workplace plans generally must begin at age 73, and the first one can be delayed to April 1 of the following year. Under SECURE 2.0 the age is scheduled to be 75 for people born in 1960 or later. A tax professional can confirm the age that applies (IRS and Congressional Research Service, reviewed November 8, 2026).
Do Roth accounts have required withdrawals during the owner's lifetime?
Not for Roth IRAs. The IRS states that withdrawals are not required from Roth IRAs or designated Roth accounts while the owner is alive, although beneficiaries are subject to distribution rules. Qualified distributions are tax-free when the requirements are met, and the rules for non-qualified distributions differ (IRS, reviewed November 8, 2026).
