Withdrawal order calculator

Three accounts, three tax treatments. Which one you draw down first changes both the tax you pay and how much is left — without changing a single return.

Taxable brokerage$600,000Tax-deferred (401k / IRA)$1,000,000Roth$400,000

Annual spending needed, after tax$80,000Years30Return5%Ordinary income tax rate22%Applies to every dollar out of the tax-deferred account.Long-term capital gains rate15%Share of the taxable account that is gain50%Only the gain is taxed; your original contributions are not.

After 30 years, from the same $2,000,000

Taxable first, then deferred, then Roth$1,970,995

The conventional order · total tax paid $544,712

Tax-deferred first, then taxable, then Roth$1,933,025

Empties the taxed account early · total tax paid $400,334

A little from each, proportionally$2,176,870

Spreads the tax across every year · total tax paid $376,059

Same money, same spending, same returns. Changing only the order of withdrawals moves the ending balance by $243,844 — about 12% of what you started with.

The gap is tax. Nothing here earned a better return than anything else.

A flat rate stands in for the real bracket system here, so treat the spread as an illustration of why order matters rather than a plan. Real sequencing also has to account for required minimum distributions, Social Security timing, Medicare income thresholds, and state tax — all of which can change the answer. Check current rules at irs.gov.

Why order matters at all

The three account types are taxed in completely different ways, and that is the whole mechanism:

Taxable brokerage. Only the gain portion is taxed, generally at long-term rates. Your original contributions come out untaxed, so the effective rate on a withdrawal is well below the headline capital gains rate.
Tax-deferred (401k, traditional IRA). Every dollar withdrawn counts as ordinary income. This is usually the most expensive dollar to take.
Roth. Withdrawals are untaxed, so a dollar needed costs exactly a dollar of balance.

To net $80,000 of spending you might need to withdraw $80,000 from a Roth, about $86,000 from a taxable account, or over $102,000 from a tax-deferred account. Same spending, very different amounts leaving the portfolio — and whatever stays behind keeps compounding.

Lower total tax does not mean more money

This is the result most people find surprising, and the calculator shows it directly. With the default figures, drawing from the taxable account first pays more total tax than drawing from the tax-deferred account first — and still ends with more money.

The reason is timing. What matters is not the total tax bill but how much money leaves the portfolio in the early years, because those dollars are the ones with the longest left to compound. An order that minimizes the tax bill by emptying an account early can still lose, if doing so pulls more capital out sooner.

So “pay the least tax” is the wrong objective. The objective is the balance at the end, and tax is one input to it.

There is no universally correct order

The conventional answer — taxable, then tax-deferred, then Roth — is a reasonable default and not a law. Which order wins depends on your balances, your rates, and how long the money has to last. Change any of the sliders enough and the ranking changes.

That is exactly why this is a calculator rather than a rule. Put your own numbers in and see which order your situation favors.

What this deliberately leaves out

A flat tax rate stands in for the real bracket system, which is the biggest simplification here. In practice withdrawals fill brackets from the bottom, so the effective rate on a tax-deferred withdrawal is usually lower than a marginal rate — and the real optimization is often about filling low brackets deliberately in early retirement.

It also ignores required minimum distributions, which eventually force withdrawals from tax-deferred accounts whether you want them or not; Social Security timing; income thresholds that affect Medicare premiums; and state tax, which varies enormously.

Any of those can change the answer. This tool exists to show that the order is worth thinking about at all — which most people never consider — not to produce your plan. Check current rules at irs.gov, and this is one area where a professional looking at your whole position genuinely earns their fee.

Educational only. This explains how these products and accounts work in general. It is not financial, tax, or legal advice, and not a recommendation to buy anything. Your situation is specific to you — check with a licensed professional before acting.