Re: LIFO withdrawls - always best ? 401K and IRA too ?
I have never made an after-tax contribution to my 401(k), hence all money taken out would be taxed the same way as ordinary income (and not just the gains). Thus, LIFO, FIFO, etc does not make sense for a 401(k).
For a traditional IRA, if you have only before-tax contributions, then the entire withdrawal is taxed as ordinary income as tax. If you have after-tax and before-tax contributions, you should have file form 8606 with the IRS to indicate the amount of after-tax contributions you made. Then when you withdrawal, a pro-rata proportion of the withdrawal is considered to come from your after-tax contribution and you do not pay taxes on it. Thus, once again there is no LIFO, FIFO whatever allowed. Basically you don't have choice.
I think our friend nords occassionally writes of the hassles of figuring out the tax situation of his FIL's IRA withdrawals in the situation of after- and before- tax contributions. The moral of his story to me: Do not make after-tax contributions to a traditional IRA. But others may get a different moral.