Tax-efficient retirement withdrawal strategies determine which account you tap first, and the standard advice gets it wrong for most households. The common rule says spend taxable accounts, then tax-deferred, then Roth. John Shedenhelm rarely follows that order, because it wastes the lowest-tax years a retiree will ever have.
The Standard Order and Why It Fails
The conventional sequence exists for a reason. Leaving tax-deferred money alone lets it compound untouched, and deferring taxes feels like winning.
The problem shows up at 73.
Follow the standard order and your early retirement years look great. Taxable account withdrawals generate little taxable income, so you might report almost nothing and pay almost nothing. Then required minimum distributions begin, your untouched IRA has grown for a decade, and the RMD lands on top of Social Security all at once.
A household that paid 0% for eight years suddenly pays 24%, plus Medicare surcharges, plus tax on 85% of their Social Security. They didn’t avoid the tax. They pushed it into their highest-rate years and added a decade of growth to the amount being taxed.
Those empty early years were the opportunity. Deferring straight through them is the most expensive mistake in retirement tax planning.
Did You Know? Required minimum distributions begin at age 73 and rise to 75 starting in 2033. Missing one triggers a 25% excise tax on the shortfall, reduced to 10% if corrected within two years. (IRS)
The Better Approach: Fill Brackets on Purpose
Instead of emptying one account before touching the next, blend withdrawals each year to deliberately fill a target tax bracket.
Here’s the mechanic. In 2026, a married couple both over 65 gets a $32,200 standard deduction, plus $1,650 each in additional standard deduction for being 65 or older, plus $6,000 each in the separate senior deduction that runs through 2028 and phases out at higher incomes. Stack those and roughly $47,500 of income comes in before the first dollar of federal tax. The 12% bracket then runs to $100,800 of taxable income.
A retiree spending $90,000 a year might pull most of it from a taxable account and report very little income. Filling the 12% bracket instead means taking roughly $100,000 of pre-tax withdrawals or Roth conversions, paying 10% to 12% on the portion above the deduction, and drawing the rest of the spending from taxable savings.
The tax paid in that year goes up. Lifetime tax paid goes down, often by a lot, because those dollars would otherwise come out at 22% or 24% after 73.
Running the Math Backward
The way the advisors at Eagle Financial Solutions approach this is to start at 73 and work backward.
Project the pre-tax balance forward to age 73. Calculate the first RMD. Add Social Security at your planned claiming age. That total tells you the bracket you’re headed for whether you plan or not.
If the projection lands you in the 24% bracket at 73, every year between retirement and 73 that you spend in the 12% bracket is a wasted year. The gap between those two rates, multiplied by the dollars you could have moved, is the size of the opportunity.
Most people have between five and twelve of those years available. Very few use them.
Pro Tip: Do this projection before you claim Social Security, not after. Claiming early adds taxable income to exactly the years you’d want kept clear for conversions, and the decision is difficult to reverse after 12 months.
Three Traps That Change the Answer
Bracket filling is the framework. Three specific rules can override it in any given year.
The Social Security Tax Torpedo
How much of your Social Security gets taxed depends on provisional income: your adjusted gross income, plus tax-exempt interest, plus half your Social Security benefit.
For joint filers, up to 50% of benefits become taxable above $32,000 of combined income, and up to 85% above $44,000. Single filers hit those thresholds at $25,000 and $34,000. (IRS Publication 915)
These thresholds have never been adjusted for inflation since they were set. Inside the phase-in range, each additional dollar of IRA withdrawal also drags Social Security dollars into taxable income, producing effective marginal rates well above the stated bracket. Some retirees face an effective 22.2% rate while nominally sitting in the 12% bracket.
Medicare IRMAA Cliffs
Medicare’s income-related monthly adjustment amount is a cliff, not a phase-in. Cross the line by one dollar and the full surcharge applies for the entire year.
In 2026, the standard Part B premium is $202.90. Single filers above $109,000 and joint filers above $218,000 pay a surcharge on top, starting at $81.20 per month for Part B plus $14.50 for Part D. (Kiplinger)
The lookback is two years. Your 2026 premium is based on your 2024 return. A large conversion done at 63 shows up as a Medicare bill at 65, which catches people completely off guard.
The 0% Capital Gains Rate
Joint filers pay 0% on long-term capital gains up to $98,900 of taxable income in 2026. Single filers get 0% up to $49,450.
In a year where you’re not doing conversions, harvesting gains at 0% resets your cost basis for free. This competes directly with bracket filling, since both use the same income space. You generally can’t do both in the same year, which is why the plan should assign each year a job.
Did You Know? Starting at 70½, you can send up to a set annual amount directly from an IRA to charity as a qualified charitable distribution. It counts toward your RMD but never enters adjusted gross income, so it sidesteps the Social Security torpedo and IRMAA at the same time. Pairing it with legacy and philanthropic planning makes it the most tax-efficient dollar in the plan.
What a Year-by-Year Plan Looks Like
A working withdrawal plan assigns each year a target and a job.
| Phase | Typical Ages | Job |
|---|---|---|
| Early retirement | 60–66 | Fill 12% or 22% bracket with conversions; spend from taxable |
| Pre-Medicare | 63–64 | Watch the two-year IRMAA lookback before large conversions |
| Social Security starts | 67–70 | Reassess provisional income; smaller conversions |
| RMD years | 73+ | Take RMDs, use QCDs, spend Roth to stay under cliffs |
Pro Tip: Build this table for your own household once, then keep it to one page. The retirees who follow their plan are the ones who can see the whole decade at a glance, not the ones with the most detailed spreadsheet.
Notice that no phase says “empty this account.” Every year draws from more than one bucket. That’s what makes the strategy work, and it depends on having built balances in all three account types during your working years, which is the point of a deliberate contribution build order.
This sequencing sits at the center of our tax-smart retirement approach and connects directly to the income planning framework we build first.
Frequently Asked Questions
What is the best order to withdraw from retirement accounts?
There is no single order that works for everyone. The better approach blends withdrawals across taxable, tax-deferred, and Roth accounts each year to fill a target tax bracket, rather than emptying one account type before starting the next.
How can I reduce taxes on required minimum distributions?
Convert pre-tax balances to Roth during the low-income years between retirement and age 73, which shrinks the balance RMDs are calculated on. After 70½, qualified charitable distributions satisfy RMDs without adding to taxable income.
What is the Social Security tax torpedo?
The torpedo happens when additional retirement withdrawals push more of your Social Security benefit into taxable income. Joint filers see up to 85% of benefits taxed above $44,000 of provisional income, creating effective marginal rates higher than the stated bracket.
Should I take money from my Roth IRA first?
Rarely. Roth dollars are most valuable in years when an extra withdrawal would cross an IRMAA cliff or trigger the Social Security torpedo, so they work best as a release valve later rather than a first source.
The Bottom Line
The order you draw from retirement accounts is worth more than most investment decisions you’ll make in retirement, and the default order hands your lowest-tax years back to the IRS. Filling brackets deliberately between retirement and 73 is where the money is.
The projection that shows what your RMD looks like at 73 takes about an hour to build and changes how most people sequence the next decade. Schedule a withdrawal strategy review with John Shedenhelm, or reach our Columbus office to see your numbers before the next tax year starts.
This article is for educational purposes and is not individualized investment or tax advice. Tax figures reflect 2026 federal rules and are subject to change. Individual results depend on filing status, state taxes, and personal circumstances. Consult a qualified tax professional before acting.
