01 May What Order Should You Withdraw From Accounts in Retirement?

What Order Should You Withdraw From Accounts in Retirement?

Once you reach retirement, the focus shifts from saving to creating income. One of the most important—and often overlooked—decisions is which accounts to withdraw from first.

The order you choose can impact:

• Your tax situation
• How long your assets may last
• Your overall financial flexibility

There’s no universal answer, but understanding the general framework can help you make more informed decisions.

At Nova Wealth Management, based in Bonita Springs, Florida, we help individuals and families throughout Naples, Estero, Fort Myers, and surrounding Southwest Florida communities design retirement income strategies that align with long-term goals.

1. Understanding the Three Main Account Types

Most retirees have a combination of:

• Taxable accounts (brokerage accounts)
• Tax-deferred accounts (Traditional IRA, 401(k))
• Tax-free accounts (Roth IRA)

Each is taxed differently, which is why withdrawal order matters.

2. A Common Starting Point: Taxable Accounts First

Many strategies begin with taxable accounts.

Why:

• Capital gains may be taxed at lower rates
• Allows tax-deferred accounts to continue growing
• May help manage overall taxable income

3. Tax-Deferred Accounts Next

After taxable accounts, withdrawals often shift to tax-deferred accounts.

These include:

• Traditional IRAs
• 401(k)s

Withdrawals are typically taxed as ordinary income.

4. Roth Accounts Often Used Later

Roth accounts are often preserved for later years.

Why:

• Qualified withdrawals are generally tax-free
• No Required Minimum Distributions (for original owners)
• Can provide flexibility in managing taxes

5. Required Minimum Distributions (RMDs) Can Change the Order

Once RMDs begin:

• You are required to take distributions from certain accounts
• This may override a preferred withdrawal order

Planning ahead can help reduce the impact of RMDs.

6. Tax Bracket Management Matters

The goal isn’t just order—it’s tax efficiency over time.

This may involve:

• Spreading income across years
• Avoiding large spikes in taxable income
• Coordinating withdrawals strategically

→ Learn more:
https://novawealthmanagement.com/financial-services/retirement-tax-planning/

7. Social Security Timing Plays a Role

When you begin Social Security can affect:

• Your taxable income
• How withdrawals are structured
• Overall income strategy

Coordinating these decisions is important.

8. Healthcare and Medicare Considerations (IRMAA)

Income levels can impact Medicare premiums.

Higher income may:

• Increase Part B and Part D premiums

Managing withdrawals can help control these thresholds.

9. Flexibility Is Key

While there are general guidelines, a rigid approach may not always be ideal.

Some years you may:

• Draw from multiple account types
• Adjust based on market conditions
• Reevaluate based on life changes

10. It Should Be Part of a Coordinated Plan

Withdrawal strategy works best when integrated with:

• Investment planning
• Tax strategy
• Retirement income planning
• Healthcare planning

→ Learn more:
https://novawealthmanagement.com/financial-services/retirement-income-planning/

TL;DR — Retirement Withdrawal Order

• Start with taxable accounts (in many cases)
• Move to tax-deferred accounts
• Use Roth accounts strategically
• RMDs may require adjustments
• Focus on tax efficiency—not just order

The best withdrawal strategy is one that balances taxes, income needs, and long-term financial goals—not just a fixed sequence.

Next Steps

If you’d like to build a retirement income strategy tailored to your situation, we’re here to help.

👉 https://novawealthmanagement.com/contact-us/
📞 1-888-677-9910

Disclosure: This content is provided for general educational purposes only and does not constitute personalized financial, tax, or legal advice.