Which Retirement Account Should I Take Money From First?

November 19, 2024 — A number of people are in the fortunate position of having multiple accounts tohat could fund their retirements. They might have IRAs, 401(k)s, 403(b)s, Roths, and/or non-retirement savings and investments. But which one(s) should they tap first when they need money for retirement. Note: We are in no way an investment or financial experts, we are just laying out the issues and providinginformation for you to consider in your planning.

Complications affecting which account to withdraw from first

Before you even get to withdrawal strategies, there are other financial considerations that might apply to your decision. Among others, those include: when to apply for Social Security benefits, Roth conversions, and the state of your finances. In general we believe that in most cases it pays to wait until age 70 to start collecting Social Security, assuming you have enough to live on until then, and you and your spouse have an average life expectancy. But we could write a whole article on whether it is better to delay when you take Social Security by using your savings and investments, or let that money ride, and collect early.

Roth conversions, which allow you to tap retirement money tax free, are another complex subject, but often a worthwhile idea for people with big balances in their regular IRA and 401(k) accounts. These conversions need to thought through carefully, as you will pay taxes on any converted funds as they go in (but if you have low income or big losses you might be able to offset that).