Quick Read – Filling 12% bracket yearly with $66,950 in 401(k) withdrawals reduces lifetime federal tax from $462,000 to $275,000 over 30 years. – Withdraw 401(k) to bracket cap, brokerage gains at 0% LTCG rate, and Roth last to dodge IRMAA surcharges before age 73 RMDs. – A…
year-old couple sits on $1.5 million in a traditional 401(k), $500,000 in a Roth IRA with the five-year clock satisfied, and $400,000 in a brokerage account with a $250,000 cost basis. They spend $130,000 a year, plan to claim Social Security at 70 for a combined $58,000, and have nine years before required minimum distributions begin
The order in which they tap these three buckets between now and age 73 is worth roughly $187,000 in lifetime federal tax. That is the entire article. Why the conventional rule of thumb fails The textbook sequence (brokerage first, 401(k) next, Roth last) protects tax-free growth and looks clean on a spreadsheet.
Run it across 30 years and it produces about $462,000 in lifetime federal tax. The reason is mechanical: the 401(k) sits untouched and compounds to roughly $3.4 million by age 73, at which point the first RMD arrives at around $130,000. Stacked on top of Social Security, that withdrawal pushes provisional income high enough to make 85% of benefits taxable and lands the couple in IRMAA Tier 3 or higher for the rest of their lives, where Medicare Part B and D surcharges run several thousand dollars per person, per year.