Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Drawdown order for different types of accounts
Old 06-23-2021, 09:40 AM   #1
Dryer sheet wannabe
Join Date: Jun 2019
Posts: 14
Drawdown order for different types of accounts

Is there conventional wisdom that says what order to draw down your different types of savings (taxable, IRA, and ROTH)? I've done some analysis that says to always use up taxable savings first (to defer taxes as much as possible), and Roth last (to let it grow as long as possible). Is this always the best strategy?
tofer is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 06-23-2021, 09:47 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 29,718
Yes, the conventional drawdown priority is taxable, tax-deferred and tax-free and IMO it is hard to go wrong with that, especially if it is supplemented by Roth conversions from tax-deferred to tax-free as your tax situation allows at a lower tax cost than later when you are colecting pensions, SS and RMDs.

Another option if taxable is in appreciated equities and retirement is very well funded is to leave taxable alone, withdraw from Roth and then do Roth conversions from tax-deferred as tax situation allows to refill the tax-free. The play is that heirs get a stepped-up basis when you die so a hope that taxes on those unrealized gains never happen (assuming that stepped up basis is still around).
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline   Reply With Quote
Old 06-23-2021, 09:47 AM   #3
Recycles dryer sheets
Join Date: Jul 2011
Location: Reading, MA
Posts: 313
That's the strategy for early retirees since you can't easily withdraw from tax-deferred before 59-1/2.

But situations vary.

When I retired eight years ago at 63, I had a large tax-deferred account, a modest Roth IRA and essentially zero taxable account.
So all my withdrawals came from tax-deferred.

Nowadays, I still have a good sized tax-deferred 403(b), but a much larger Roth IRA, and a nicely growing taxable account where I stash excess retirement income...
TheWizard is offline   Reply With Quote
Old 06-24-2021, 01:23 AM   #4
gone traveling
Join Date: Oct 2007
Location: Willamette Valley, Oregon
Posts: 1,734
I would say there is no "conventional" wisdom, as so much depends on a person's particular financial situation. How old are you, what types of income do you have, what are the relative sizes of your taxable vs nontaxable accounts, what are your income needs, what unrealized gains exist in taxable accounts that would have to be realized upon withdrawal, what are your intended uses for making a withdrawal, and on and on and on.
RetireeRobert is offline   Reply With Quote
Old 06-24-2021, 06:33 AM   #5
Full time employment: Posting here.
Join Date: Mar 2011
Location: North TX
Posts: 749
All of the above. In our situation, we will likely be doing Roth conversions and living off taxable for maximizing ACA benefits and lowering future taxes. Gradually we could use the principle of the Roths to supplement if needed, but not planning to do it.

We are 50 & 56 & need 10+ years of "bridge" monies once we actually start. Waiting for DW's comfort zone to kick in.
Surewhitey is offline   Reply With Quote
Old 06-24-2021, 06:47 AM   #6
Thinks s/he gets paid by the post
Join Date: Jul 2013
Posts: 1,180
I think iorp can provide suggestions:
mrfeh is offline   Reply With Quote

ira, roth, savings, taxes

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Order of accounts for Roth Conversions? Splash FIRE and Money 10 04-14-2018 04:06 PM
Minimize taxes during drawdown from various account types in retirement RioIndy FIRE and Money 5 01-27-2018 08:54 PM
Various sources/types of IRA accounts - OK to combine? stephenson FIRE and Money 2 05-09-2017 04:02 PM
Drawdown of His and Her Retirement Accounts...? topsider FIRE and Money 1 07-13-2016 01:52 PM
Any reason to keep different "types" of credit cards? mpeirce FIRE and Money 43 06-22-2016 08:45 AM

» Quick Links

All times are GMT -6. The time now is 07:52 PM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2021, vBulletin Solutions, Inc.