Which Retirement Account Should You Withdraw From First? Roth, IRA, or Brokerage?
Executive Summary
Knowing how much income you need in retirement is important, but knowing where it comes from can make a far bigger difference than most people expect. Keith Demetriades, CFP®, CKA®, breaks down a simple retirement withdrawal strategy that can help you reduce taxes, avoid costly surprises, and use your accounts in a smarter, more efficient way. If you want your money to last—and give you more control—this is where to start.
Want to watch an in-depth exploration of this topic?
Check out this video on my YouTube channel, @SavvySteward: Which Retirement Account Should You Withdraw From First? Roth, IRA, or Brokerage?
Take the free “How Much Do I Need To Retire” Quiz here:
https://secure.kingsview.com/keith-savvy-steward-quiz-youtube#q1
Which Retirement Account Should You Withdraw From First? Roth, IRA, or Brokerage?
You’ve probably spent time estimating how much income you’ll need to support your lifestyle in retirement. But here’s the question many people overlook: How will that income show up on your tax return?
Because once you stop working, the tax rules change. You’re not just earning a paycheck. You’re pulling from accounts that have different tax treatments, and the order you choose can have serious long-term effects on your finances.
Does it really matter which retirement account you withdraw from first?
Yes, it absolutely matters. Retirement income is not taxed the same way across accounts.
Withdrawals from a traditional IRA or 401(k) are taxed as ordinary income. Roth withdrawals are tax-free. Brokerage accounts are taxed on capital gains only. And the mix of these sources can affect everything from your marginal tax bracket to how much of your Social Security is taxed to what you’ll pay in Medicare premiums.
In other words, it’s not just about getting income. It’s about how that income stacks up on your return, and whether it triggers penalties or thresholds you could have avoided with better sequencing.
What’s the most effective retirement withdrawal sequence?
While individual situations may vary, a general strategy that works well for many retirees looks like this:
- Start with taxable brokerage accounts.
These dollars have already been taxed. You’ll only pay on the gains, and you may qualify for preferential capital gains rates, especially early in retirement when your income is lower. - Then move to tax-deferred accounts like IRAs and 401(k)s.
These withdrawals are taxed as ordinary income, so timing is key. This is also when Roth conversions might make sense. If your income is modest, you can shift some traditional IRA dollars into a Roth at a favorable rate, reducing future RMDs and creating more flexibility. - Use Roth accounts last.
Because Roth withdrawals are tax-free and don’t count toward income thresholds for Social Security or Medicare, they’re incredibly valuable in later retirement. Saving them for last often preserves options when other sources are locked in.
This order isn’t just about saving on taxes—it’s about extending the life of your accounts and staying ahead of the rules that govern retirement income.
How does this strategy align with the three stages of retirement?
Here’s how the sequencing fits most people’s lives:
- In your 60s, you’re transitioning from saving to spending. You likely have some flexibility and lower income, which makes it a prime time to use taxable accounts and consider strategic Roth conversions.
- In your 70s, flexibility shrinks. Required Minimum Distributions begin, Social Security is in full effect, and Medicare premiums are on the table. Your goal now is coordination, making sure withdrawals don’t cause unnecessary tax ripple effects.
- In your 80s and beyond, income becomes more predictable. You’ve likely preserved some Roth dollars or other flexible resources. This is when simplification matters—for both you and anyone who may need to help manage your affairs.
The withdrawal strategy of taxable first, then tax-deferred, and finally Roth tends to match these life stages. It gives you the right tools at the right time.
What are the risks of withdrawing in the wrong order?
Withdrawing from your accounts in the wrong sequence won’t necessarily leave you broke, but it can cost you more in taxes, increase your Medicare premiums, and reduce your control over how and when you spend.
For example, starting with your traditional IRA may seem easy, but doing so early can unnecessarily boost your taxable income—raising taxes, affecting Medicare, and increasing how much of your Social Security is taxed.
On the other hand, tapping into Roth dollars too soon means giving up one of your most valuable future tools. You lose flexibility when you may need it most.
A better approach? Use each type of account strategically, at the time when its unique advantages are most useful. That way, you’re not just meeting income needs, you’re preserving options and reducing stress for the long haul.
Contact Information
Keith Demetriades, CFP®, CKA®
For more information or to start a conversation about your financial future, contact Keith at (806) 223-1105 or visit Kingsview Partners.
Disclaimer: The information provided in this blog is for educational purposes only and should not be considered financial advice. Please consult a qualified financial advisor to discuss your specific situation and needs. Past performance does not indicate future results, and all investments carry risks, including potential loss of principal. Any financial product or strategy references are purely illustrative and should not be construed as endorsements or recommendations.
