A withdrawal order strategy is the plan for which accounts you tap first to fund your life in retirement. In 2026, this strategy is more nuanced due to new tax laws (like the OBBBA) and higher standard deductions for seniors, which make “tax-bracket management” the primary goal.

Retirement Withdrawal Order: A Strategic Outline

The “Conventional Wisdom” (Sequential Order)

  1. Taxable Accounts First: Most retirees start with brokerage accounts. Because these are taxed at lower capital gains rates (often 0% or 15%), it allows your tax-advantaged accounts to keep growing.
  1. Tax-Deferred Accounts Second: Once brokerage funds are exhausted, you move to Traditional IRAs or 401(k)s. These are taxed as ordinary income, so this phase often marks your highest tax years.
  1. Tax-Free (Roth) Accounts Last: These are the “crown jewels.” By saving them for last, you maximize the years of tax-free growth and provide a buffer for massive unexpected expenses late in life, like healthcare.

The Modern “Proportional” Strategy

  1. Smoothing the Tax Bill: Instead of emptying one account at a time, you take a little from each every year. This prevents you from being in a 0% tax bracket early on and a 32% bracket later when Required Minimum Distributions (RMDs) kick in.
  2. Filling the Lower Brackets: In 2026, the 10% and 12% tax brackets have been widened. A smart strategy uses Traditional IRA withdrawals to “fill” these low brackets every year, even if you don’t need the cash, to reduce the future size of your RMDs.
  3. Avoiding the “Tax Bump”: Taking only from taxable accounts early on can lead to a “tax cliff” at age 73 or 75, when mandatory withdrawals from large Traditional IRAs might push you into a higher tax bracket and increase your Medicare premiums.

2026 Specific Considerations

  1. The $6,000 Senior Bonus: New for 2026, seniors 65+ get an extra $6,000 deduction (if income is under $75k/$150k). This allows you to withdraw more from a Traditional IRA tax-free than in previous years.
  2. Roth Conversion Windows: The years between retirement and age 73 (when RMDs start) are the “Golden Years” for Roth conversions. Many 2026 retirees are withdrawing from taxable accounts to pay the taxes on converting Traditional assets to Roth.
  3. The IRMAA Trap: If you withdraw too much in a single year to fund a “Go-Go” lifestyle move or home downsize, it can trigger IRMAA surcharges, significantly raising your Medicare Part B and D premiums two years later.
  4. Charitable Flexing: For those 70½ or older, Qualified Charitable Distributions (QCDs) allow you to send up to $105,000 directly from your IRA to a charity. This counts toward your RMD but isn’t added to your taxable income.

The Priority Checklist

  1. Meet your Required Minimum Distributions (RMDs) first, as the penalty for missing them is 25%.
  2. Tap into taxable interest and dividends that are generated naturally by your brokerage account.
  3. Withdraw enough from Traditional IRAs to use up your 2026 standard and senior bonus deductions.
  4. Use Roth IRA funds only for “lumpy” expenses (like a new car or a big trip) that would otherwise push you into a higher tax bracket.

Source: T. Rowe Price, “How to make your retirement account withdrawals work best for you” (2026) and Fidelity Investments.