Most retirees have four types of accounts: a traditional IRA or 401(k), a Roth IRA, a taxable brokerage account, and a Health Savings Account (HSA). Each of these accounts comes with its own tax rules. Traditional IRA withdrawals are taxed as ordinary income, Roth and HSA withdrawals are tax-free when used correctly, and brokerage accounts are taxed at long-term capital gains rates often 0% for income up to around $48,000 in 2025. Understanding how these tax treatments work together is the foundation of a smart withdrawal plan.

So, what’s the best order to withdraw from your accounts? Start with the brokerage account first. This allows you to take advantage of the 0% capital gains tax bracket, meaning you can sell investments and pay little or no tax if you stay under the threshold. Next, use HSA funds only for qualified medical expenses to preserve their tax-free benefits. Finally, make modest Roth conversions moving money from your traditional IRA to a Roth to fill up your current tax bracket without crossing into a higher one. This approach builds tax-free growth for the future while reducing taxable required minimum distributions (RMDs) later on.

Roth conversions are one of the most powerful tools for long-term tax management. By converting a portion of your traditional IRA each year, you reduce the balance subject to future RMDs and create a source of tax-free income in retirement. For example, converting $10,000 to $15,000 could result in a tax bill of about $1,800, but paying that tax now especially with cash from a brokerage account—can lead to greater savings later. A strategic Roth conversion plan ensures your money continues to grow tax-free and provides flexibility when tax laws change.

Timing matters, too. Before age 73, you have control over when to take withdrawals and conversions. Once RMDs begin, you’re required to take money out of your traditional accounts each year, which can push you into a higher tax bracket. That’s why it often makes sense to complete most of your Roth conversions before RMDs start. At ages 71 and 72, your deduction options may shrink, but smaller conversions of $10,000 to $12,000 can still be efficient, typically generating around $2,000 in taxes.

Charitable giving can also play a role in a tax-smart strategy. Qualified Charitable Distributions (QCDs) allow you to donate directly from your IRA to a charity, satisfying your RMD while keeping that amount out of your taxable income. This strategy helps manage account balances and can reduce your overall tax burden while supporting causes you care about.

Ultimately, the key to a sustainable retirement withdrawal plan is balance. A hybrid approach drawing from multiple accounts in a coordinated way offers the most flexibility and the lowest lifetime tax bill. The goal isn’t just to minimize taxes this year but to manage them over decades. Protecting the 0% capital gains bracket, filling up the 12% ordinary income bracket, and being mindful of Medicare IRMAA thresholds all contribute to a smarter, more predictable financial future.

In retirement, every decision about where your money comes from matters. By combining tax-efficient withdrawals, strategic Roth conversions, and charitable planning, you can maximize your income while keeping more of what you’ve earned. The result? A retirement that’s not only comfortable, but sustainable.

All writings are for educational and entertainment purposes only and does not provide investment or financial advice of any kind.

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