The conventional rule is to spend from taxable accounts first, then tax-deferred accounts such as traditional IRAs and 401(k)s, and Roth accounts last. It is a reasonable starting point, but it often is not the lowest-tax order. Many retirees do better by drawing from more than one kind of account each year, so they fill low tax brackets on purpose rather than leaving them empty early and crowded later.
What are the three kinds of accounts?
- Taxable. Brokerage and savings accounts. You pay tax on interest and dividends each year, and on gains when you sell. Withdrawals of principal are not taxed again.
- Tax-deferred. Traditional IRAs, 401(k)s, 403(b)s and similar plans. Every dollar withdrawn is taxed as ordinary income. Required minimum distributions (RMDs) eventually force withdrawals.
- Tax-free. Roth IRAs and Roth 401(k)s. Qualified withdrawals are not taxed, and Roth IRAs have no RMDs for the owner.
Why is the conventional order popular?
Spending taxable money first lets the tax-deferred and Roth accounts keep growing without tax. And it is simple. For some retirees, especially those with modest tax-deferred balances, it works fine.
Where does it go wrong?
The problem shows up years later. A retiree who lives on taxable savings in their sixties may report very little income. Then RMDs begin, Social Security is fully underway, and the tax-deferred accounts, which kept growing, now force large taxable withdrawals each year. Income is pushed into higher brackets than it ever needed to be.
Leaving low brackets empty early can mean paying higher brackets later.
The quiet years between retirement and RMDs are often the best time to draw some tax-deferred money, or to convert it to Roth, at low rates. That is the idea behind the Roth conversion window.
What else shapes the order?
Required minimum distributions
Under SECURE 2.0, RMDs start at age 73 for people born from 1951 through 1959, and at 75 for people born in 1960 or later. The larger the tax-deferred balance at that point, the larger the forced income.
Medicare premiums
Medicare Part B and D premiums rise with income, using your tax return from two years earlier. A large withdrawal or conversion at 63 can raise premiums at 65. Crossing a threshold by one dollar raises premiums for the full year. For 2026, the surcharge starts above $109,000 of modified adjusted gross income for single filers and $218,000 for joint filers (CMS, November 2025).
Social Security taxation
Up to 85% of Social Security benefits can be taxable federally, depending on your other income. Drawing more from tax-deferred accounts can pull more of your benefit into tax. Drawing from Roth or taxable principal does not.
Capital gains brackets
Long-term gains from a taxable account can fall in the 0% federal bracket if taxable income is low enough. Selling appreciated holdings in those years, rather than later, can reset basis at no federal tax.
Heirs
Most non-spouse heirs must empty an inherited IRA within ten years and pay tax on it, often during their own peak earning years. A Roth passes tax-free. Taxable assets may receive a stepped-up basis at death. Those facts can argue for spending pre-tax money during your own lifetime and leaving Roth and taxable assets to heirs.
How does Utah affect the answer?
Utah taxes IRA and 401(k) withdrawals at its flat individual rate, 4.45% for 2026, and it taxes Social Security benefits. Its Social Security benefits credit offsets the tax on benefits, but it shrinks by 2.5 cents for each dollar of modified adjusted gross income above $54,000 for single filers and $90,000 for joint filers. A separate $450 retirement credit applies only to people born on or before December 31, 1952, and you cannot claim both (Utah Code sections 59-10-104, 59-10-1019 and 59-10-1042, current as of October 2026). Because Utah's rate is flat, the main lever is the federal bracket, but the phase-out of those Utah credits means a larger withdrawal can raise Utah tax more than the flat rate alone suggests.
A hypothetical example
Hypothetical. A married Utah couple retires at 62 with a taxable account, two large traditional IRAs and a small Roth. Following the conventional order, they would live on the taxable account for several years and report little income. An alternative would draw from the taxable account and also take enough from the IRAs each year to fill a chosen federal bracket, while staying under the next Medicare premium threshold, and delay Social Security. Under the alternative, their tax in their sixties is higher, but their IRA balances, and so their RMDs, are smaller later. Which version produces less lifetime tax depends on their spending, their life expectancy, future tax rates and what they want to leave. It is a model, not a rule.
So which account first?
Usually more than one, in amounts set year by year. The useful question is not "which account first" but "how much from each account this year, given everything else on the return". The answer changes as markets, tax law and your life change, so it is worth revisiting every year.
A retirement plan is an income plan, a tax plan and an estate plan that agree with each other. Our retirement planning page describes how we build that year-by-year model for Utah families.
Educational only. Not investment, tax, or legal advice. Every situation is different; the right answer depends on the numbers, and that's what the strategy session is for. Investing involves risk, including possible loss of principal.