The order you withdraw matters. Compare three strategies — conventional (taxable→IRA→Roth), proportional, and strategic bracket-filling — across your full retirement period.
Most retirement guides recommend the 'conventional' withdrawal order: taxable accounts first, then Traditional IRAs/401(k)s, then Roth last. The logic: defer taxes as long as possible, let Roth grow tax-free for heirs. But this often produces higher lifetime tax than alternatives because it concentrates Traditional withdrawals in later years (when RMDs and Social Security stack), pushing into higher brackets.
Proportional withdrawal pulls equal percentages from each account type each year. Tax burden is spread evenly. Simple but rarely optimal because it doesn't take advantage of bracket-filling opportunities or leave Roth to compound tax-free.
Strategic bracket-filling withdraws from Traditional IRA up to the top of the 12% bracket (or other targeted bracket), supplements with tax-free Roth for remaining spending, and preserves taxable accounts for end-of-life (when stepped-up basis at death eliminates capital gains). This typically minimizes lifetime tax.
The savings between strategies can be $50,000-$200,000+ over a 30-year retirement, and the strategy doesn't require complex tax software — just discipline about the withdrawal order. Use this calculator to model your specific situation.