Smart Withdrawal Order Cheat Sheet

🔧 Why Withdrawal Order Matters

The order you withdraw from your retirement accounts can significantly impact your tax bill, Medicare premiums, and portfolio longevity. A tax-smart sequence may help reduce lifetime taxes and extend the life of your assets.

✅ General Rule of Thumb

1. Taxable Accounts First

• Use dividends, interest, and capital gains.

• Manage capital gains to stay in lower tax brackets.

2. Tax-Deferred Accounts (Traditional IRA/401(k))

• Helps reduce future RMDs.

• Consider partial Roth conversions before RMDs start.

3. Tax-Free Accounts (Roth IRA)

• Save these for last to maximize tax-free growth.

• Great for legacy planning or big-ticket expenses.

🚫 When to Break the Rule

• Filling up lower tax brackets: Pull from tax-deferred accounts early if you’re in a low bracket.

• Avoiding IRMAA thresholds: Adjust withdrawals to prevent higher Medicare premiums.

• Harvesting capital gains: Sell appreciated assets in years with low taxable income.

• Roth conversions: Done before RMD age to reduce future taxable income.

🔍 Example: Early Retiree Strategy

Age 60, No Income Yet:

• Use taxable assets for spending.

• Do partial Roth conversions up to the 22% bracket.

• Avoid triggering IRMAA limits for future Medicare.

💼 Key Considerations

• Monitor tax brackets and income thresholds annually.

• Coordinate with Social Security timing and RMDs.

• Re-evaluate as your life circumstances and tax laws change.

This cheat sheet is for educational purposes only and not intended as tax or financial advice.