Order of Withdrawal DETAILS

[FLSUnFIRE]

Early on for me I'm using Taxable (cost basis about 15%) and trying to manage MAGI as a single filer for ACA. It's making for pretty low withdrawal and it's possible I'll need to supplement my "annual" withdrawal sometime next year. Eventually, I'll start a SEPP but once I do I'm locking in what could be significant regular income for close to a decade so I'm "stalling" to see how the market does (extending or shortening my taxable WD period -I don't want to deplete it so I have flexibility later), how my expenses evolve (I'm still very early in my ER) and how much other income from fun jobs etc I get. Once I start the SEPP, it should cover most of my expenses and since I'll plan to use the RMD method the amount should increase with time since my portfolio will likely continue to grow in my younger years while my life expectancy decreases. SEPP will also help keep my TSP from becoming massive causing huge RMDs later in my retirement.

I don't think there is one best order that can apply to anyone and even for an individual there are many "good" options. Only with hindsight will we know what would have been optimal for the way our life and tax laws unfold.

 

[racy]

Is there a reliable list of each states' status for this in the context of stepping up the basis of joint accounts for a surviving spouse?

https://smartasset.com/financial-advisor/community-property-states This may or may not answer your question.

 

[Montecfo]

Is there a reliable list of each states' status for this in the context of stepping up the basis of joint accounts for a surviving spouse?

Put your question into your browser and you will find lists. There are nine such states and there is a wiki.

 

[davidfin]

Fired at 57, 12 years ago. Living expenses covered primarily through a combination of cash from savings augmented by judicious use of LTCG from taxable account to minimize taxes and maximize ACA subsidy. We saved a boatload on insurance premiums and taxes. Once on Medicare, and savings depleted, leaned more heavily on LTCG from taxable account. Now a few years later, beginning to spend more from fairly large IRA accounts as RMD is now looming large. Haven’t begun SS to maximize benefit and create headroom to make Roth conversions. Staying under IRMAA threshold is a challenge. Can’t say for sure we optimized to the penny, but we’re satisfied with our progress. Deferring to the greatest extent possible of tapping tax deferred accounts and maximizing ACA allowed us to basically avoid or at least delay paying the tax piper. This allowed some pretty nice equity appreciation for long period of time. I thank this group for useful information and insight.

 

[Dash man]

Fired at 57, 12 years ago. Living expenses covered primarily through a combination of cash from savings augmented by judicious use of LTCG from taxable account to minimize taxes and maximize ACA subsidy. We saved a boatload on insurance premiums and taxes. Once on Medicare, and savings depleted, leaned more heavily on LTCG from taxable account. Now a few years later, beginning to spend more from fairly large IRA accounts as RMD is now looming large. Haven’t begun SS to maximize benefit and create headroom to make Roth conversions. Staying under IRMAA threshold is a challenge. Can’t say for sure we optimized to the penny, but we’re satisfied with our progress. Deferring to the greatest extent possible of tapping tax deferred accounts and maximizing ACA allowed us to basically avoid or at least delay paying the tax piper. This allowed some pretty nice equity appreciation for long period of time. I thank this group for useful information and insight.

So you managed your income to take advantage of having taxpayers pay your ACA subsidies, then complain about RMDs and paying IRMAA? I know it’s legal, morally not right.

 

[RetireBy90]

I’m not as savvy as many here, but this is what I do. We have pensions and one SS today and a rental property, so 5 “checks” each month. At 67 and 70, with 2nd SS in 2 years.
We supplement when needed with tax deferred and do Roth conversions up to IRMAA limit. Tax deferred is for what ever supplemental income we need till 2nd SS which should be sufficient income. Then remaining is for charitable while Roth will be drawn if needed and left to heirs. Our after tax is mostly gone now having used it to pay taxes for Roth conversions.

 

[AlmostThoreau]

I’ve read plenty of articles recommending:

• Taxable first, tax deferred second, tax free last

• 
  
  I wrote a computer program to simulate the various methods (one account (Roth/TIRA/Taxable) first, proportional based on balance, same amount from each account, etc) and taxable first won modestly. I'm going to do this anyway, since I retired early and don't yet have access to my IRAs, and want to minimize income until I'm on Medicare. If you're bleeding into a higher tax bracket, using the Roth for that is probably a good idea, if you have one.

 

[AlmostThoreau]

So you managed your income to take advantage of having taxpayers pay your ACA subsidies, then complain about RMDs and paying IRMAA? I know it’s legal, morally not right.

I don't know anyone who voluntarily pays more in taxes, or for health care, than they have to due to some "moral code". We have rules/laws, and you should do the best you can within those rules/laws. Everyone else will be.