‘I find that advice questionable’: Is it time to rethink the rule of tapping your Roth last — after your 401(k) and IRA?

<p>‘I find that advice questionable’: Is it time to rethink the rule of tapping your Roth last — after your 401(k) and IRA?</p>
<p>Quentin Fottrell</p>
<p>5 min read</p>
<p>Dear Quentin,</p>
<p>I’ve read this advice again and again: In retirement, withdraw first from your brokerage account, then your 401(k) and/or IRA, and finally your Roth. As for my regular brokerage account, I tend to think of it more as a backup emergency fund. If I deplete my primary emergency savings and need additional funds, it’s there.</p>
<p>I can understand evaluating this strategy each year, but the way it’s often presented suggests doing it in that strict order until each account is depleted. I find that advice questionable. Why would I go through all the effort of building a large Roth nest egg and then not use it strategically to help keep my taxable income lower throughout retirement?</p>
<p>For example, let’s say I’m retired and need an extra $10,000 for something — travel, for instance. Wouldn’t it make more sense to evaluate whether to split that $10,000 between the IRA and the Roth, rather than automatically withdrawing the full amount from a taxable brokerage account?</p>
<p>What are your thoughts on tapping your Roth and converting your 401(k) and IRA to a Roth?</p>
<p>It’s not a golden rule. You’re right about that. It’s a guide and a reminder to keep an eye on those tax brackets, as you point out, and also fulfill your Required Minimum Distributions which, along with your Social Security benefits, are likely to be taxable.</p>
<p>Some of your Social Security become taxable if your combined annual income exceeds $25,000 for individuals or $32,000 for married couples filing jointly. Up to 50% of benefits are taxed at these levels, increasing to 85% if income exceeds $34,000 (single) or $44,000 (married).</p>
<p>In your case, it makes sense to cover your RMDs, which you must start at 73, and, as you say, use nontaxable income from your Roth for those $10,000 emergency savings today, if, for example, your roof springs a leak, in order to keep a lid on your taxable income.</p>
<p>At 73, the factor is 26.5, so you must withdraw about 3.77% of the account balance, pretty close to the 4% withdrawal guideline. With, say, a $1 million in pretax retirement accounts (your post-tax accounts are not subject to RMDs), your first RMD would be about $37,736.</p>
<p>For example, falling over the income-related monthly adjustment amount (IRMAA) cliff could lead to a big jump in your Medicare Part B and D premiums if you cross that threshold, the 3.8% net investment income tax, your state taxes and survivor tax rates (when one spouse dies).</p>
<p>Falcon Wealth Advisors also busts what it calls the “spend the Roth last myth.” It also says that it’s a common misconception that Roth IRAs should be the last account tapped in retirement. It also plays into the general anxiety many retirees have about spending, period.</p>
<p>“Whether it’s buying a first home, funding a dream vacation, or covering a large purchase, Roth IRAs can act as a ‘slush fund’ without triggering taxes or penalties — if used wisely,” Falcon Wealth Advisors says. (It too acknowledges that it’s either a mindset or a myth.)</p>
<p>So your decision to take that $10,000 for travel or some other expense (a new kitchen, perhaps, or better insulation for your house) is right on the money. Convert as much as you can to a Roth when you have a low tax bracket (usually between retirement and your RMDs).</p>
<p>Dip in the market</p>
<p>Another good time to convert shares to a Roth is when there’s a big dip in the market, so you’re selling those shares at a discount and, all going well, they’ll see some upside when the correction/recession, socioeconomic crisis or pandemic is over.</p>
<p>Vanguard highlights the risks and rules for Roth conversions. “The conversion will be permanent — you can’t revert the money back to a traditional IRA.” The decision also hinges on issues like your tax rate now versus later, the final tax bill and your estate plans, it adds.</p>
<p>“There’s a five-year holding period on withdrawals of money that were part of a Roth conversion,” Vanguard says. “So if you think you’ll need the money within that time, you should reconsider. You could end up owing the taxes you were hoping to minimize with a conversion.”</p>
<p>Bottom line: “If you believe your tax rate is lower now than it will be when you start taking withdrawals, a conversion may look promising because you’ll pay conversion taxes while you’re in a lower tax bracket and enjoy tax-free Roth IRA withdrawals later.”</p>
<p>There is no annual dollar limit on the amount you can convert from a traditional IRA or 401(k) to a Roth IRA. You can convert any amount you like, just keep in mind that the converted sum is generally treated as taxable income. Read more about Roth conversions here.</p>
<p>Passed in July 2025, the One Big Beautiful Bill Act altered the tax code by increasing the SALT deduction cap to $40,000 (for annual incomes under $500,000) through 2029. It extends the Tax Cuts and Jobs Act’s individual tax rates and higher standard deductions.</p>
<p>It also introduced a $6,000 senior deduction (2025–2028) and 100% bonus depreciation for businesses. Taxpayers age 65 and older can also claim an additional $6,000 deduction per person, subject to income phase-outs. A married couple could convert up to $12,000 extra.</p>
<p>Tapping your Roth last is not even a bronze rule. It’s a decision that varies from person to person, and whether it makes sense depends on all of the above factors, and what financial pressures are going on in your life at any given time. Tapping it last is not such much a myth as it is a guideline.</p>