1. Taxable
2. Tax-deferred (from traditional IRAs or 401(k) and other employer plans)
3. Tax-free (from Roth IRAs or Roth employer plans)
The idea is that you want your tax-free income to have the chance to grow and compound as much interest as possible before tapping it. After you're 70.5, the IRS requires you to withdraw a certain amount from your employer plans and traditional IRAs. You'll want to spend those withdrawals down first before tapping into your taxable accounts.
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]]>Ben, gotta link to the report so we can read it!
All this discussion about what order to withdraw from accounts leaves a BIG issue unaddressed - when and if to take Social Security benefits. That can have a huge impact on taxation and timing. UPenn. has an independent think tank that writes on just these topics.
]]>I'll keep this in mind. It'll come in useful in 50.5 years.
]]>Vanguard's advice seems solid but I fell like I'm in the twilight zone. I would still tap the money in my mattress first.
]]>Wasn't this posted a couple days ago?
]]>I'm not even close to retirement, but it seems to me that the best way to tap a combination of Roth and traditional retirement accounts is to use both in any given year, minimizing taxes. For example, if I need $60K to live on and the tax bracket cutoff is at $40K, I would take $40K from a traditional IRA and $20K from the Roth.
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