← Retirement withdrawal sequencer
The common advice is to spend taxable money first, then traditional (pre-tax) accounts, then Roth, so tax-deferred money compounds as long as possible. For many people with modest savings that is close to right. For someone whose savings sit mostly in a traditional IRA or 401(k), it can be expensive, because the deferred tax does not go away: it comes due as required distributions, stacked on Social Security, in the very years the bracket is highest.
Your income is often lowest in the first years of retirement, after paychecks stop and before Social Security and required distributions start. The brackets are the same size every year, so low-income years leave cheap bracket space unused. Bracket filling uses it: withdraw (or convert to Roth) from the traditional account until taxable income reaches the top of a chosen bracket. You pay 10% or 12% now on money that might otherwise be taxed at 22% or 24% later.
| Factor | Pushes toward |
|---|---|
| Large traditional balance relative to spending | Filling low brackets early |
| Years of low income before benefits and distributions | Filling low brackets early |
| Mostly Roth or taxable money already | The textbook order |
| Heirs in a high bracket | Converting more to Roth |
| Your rate expected to be lower later | Waiting |
The interactions are the hard part: a withdrawal raises the taxable share of Social Security, capital gains stack on ordinary income, the taxable account pays dividends every year, and the required distribution depends on the balance you left behind. The sequencer simulates your plan year by year under each strategy and ranks them, then repeats the winner with lower returns to show whether the answer depends on a good market.
It is the stretch where each extra dollar withdrawn from a traditional account also makes more of your Social Security taxable, so the effective marginal rate on that dollar can reach 1.85 times the bracket rate. It is the main reason a bracket-filling plan spends low-income years before benefits start.
Age 73 for people born 1951 to 1959 and age 75 for people born in 1960 or later under current law. The tool lets you set the age. Check the rule that applies to you.
No. A conversion pays tax now to avoid tax later, so it helps most when your rate now is below the rate you or your heirs would pay later. It can raise Medicare premiums and the taxable part of Social Security, which this tool partly models; see what is not modelled.