Retirement Withdrawal Sequencing Calculator

The order money comes out matters as much as how much comes out

Most retirement planning attention goes toward how much to save and how much can safely be withdrawn each year. A separate, equally consequential question gets far less attention: given multiple account types — taxable, tax-deferred, and Roth — in what order should withdrawals actually be drawn from each one? Because each account type carries entirely different tax treatment, the sequencing decision can meaningfully change how much of a given year’s withdrawal a retiree actually keeps.

This calculator compares the tax cost of meeting a specific year’s withdrawal need under the conventional recommended order against a reverse approach, making the size of the difference concrete.

Why each account type is taxed so differently

A taxable brokerage account holds investments that have already been purchased with after-tax money, so a withdrawal from it generally triggers capital gains tax only on the portion representing actual investment gain, not on the full withdrawal amount — and long-term capital gains rates are often more favorable than ordinary income tax rates for many taxpayers.

A tax-deferred account — a traditional 401(k) or IRA — was funded with pre-tax contributions, meaning the entire withdrawal is taxed as ordinary income at your full marginal rate, since none of that money has been taxed at any point yet. A Roth account, by contrast, was funded with after-tax contributions, and qualified withdrawals are entirely free of federal tax — the government has already collected its share and takes nothing further.

The logic behind spending taxable and deferred accounts first

The conventional recommended sequencing — taxable accounts first, then tax-deferred, and Roth accounts last — is built around a specific insight: Roth accounts are the only ones that continue growing completely tax-free for as long as they remain untouched, and every additional year a Roth balance stays invested rather than being withdrawn extends that tax-free growth further.

Spending down taxable and tax-deferred accounts first, even though the tax-deferred withdrawals are taxed at a potentially higher rate than capital gains, preserves the Roth balance for the longest possible period of continued tax-free compounding — deferring the accounts with the best tax treatment for as long as possible, rather than depleting them early when their remaining growth potential is still greatest.

Where the conventional order stops being automatically correct

This general rule is a strong starting default, not an unconditional law, and there are specific situations where deviating from it produces a better outcome. Required minimum distributions are the clearest example — once RMD age arrives, tax-deferred withdrawals become mandatory regardless of what sequencing order would otherwise be preferred, which can force tax-deferred withdrawals earlier or in larger amounts than the conventional strategy alone would suggest.

A more subtle strategic consideration: some retirees deliberately draw down tax-deferred accounts earlier than strictly necessary, specifically during lower-income years before Social Security benefits begin or before RMDs are mandatory, using those years to intentionally fill up lower tax brackets at a favorable rate rather than saving all tax-deferred withdrawals for later years when combined income — and potentially the applicable tax rate — could be higher. This is sometimes paired with strategic partial Roth conversions during those same lower-income years, covered in more depth by the Roth conversion calculator.

What this simplified model does not capture

This calculator isolates the direct, immediate tax-rate effect of sequencing order on a single year’s withdrawal, which is a genuinely useful starting frame but not the complete picture. It does not track cost basis within a taxable account in detail — treating the withdrawal at a flat capital gains rate rather than precisely tracking the taxable gain portion of each specific sale, which a full brokerage tax-lot analysis would require.

It also does not model how withdrawal size and account source affect two other genuinely important, related factors: Medicare IRMAA surcharges, which are triggered by modified adjusted gross income and can be pushed higher by a large tax-deferred withdrawal in a given year, and the taxability of Social Security benefits, which similarly depends on combined income and can be affected by exactly which accounts a retirement withdrawal draws from. The Medicare IRMAA calculator covers that specific interaction in more depth.

Building a full retirement withdrawal strategy

Sequencing is one component of a complete retirement income strategy that also includes the overall withdrawal rate, Social Security claiming timing, and required minimum distribution planning, all of which interact with each other rather than operating independently.

The RMD calculator shows what mandatory tax-deferred withdrawals will look like once that age arrives, which is an essential input for planning how aggressively to draw down tax-deferred accounts voluntarily in the years before RMDs begin, and the retirement income gap calculator frames the broader question of how much guaranteed income already covers before any of these account-specific sequencing decisions even come into play.