Withdrawal sequencing.
Choosing which account to draw from first.

The conventional wisdom

The rule most financial media teaches: spend taxable first, Traditional second, Roth last. The rationale is that Roth grows tax-free, so you should let it compound as long as possible.

That logic is not wrong - it just ignores tax brackets. Taxable dollars and Roth dollars come out at roughly 0% federal. Traditional dollars come out at your marginal rate. Stacking Traditional into your 70s can push that marginal rate way up.

Why the textbook order is often wrong

RMDs (Required Minimum Distributions) kick in at age 73 (75 if born in 1960 or later). The RMD is a percentage of your Traditional balance that you are forced to withdraw. At 73, it starts around 4%. By 85, it is over 6%.

If you let a $1.5M Traditional balance sit untouched until 73, your first RMD is ~$60K - and it goes up every year. Combined with Social Security and any other income, that can push you well into the 22% or 24% bracket. Meanwhile, in your 60s you might have had $0 of other income - 12% bracket territory - and you wasted it.

The goal: fill lower brackets every year

For tax year 2026, the MFJ 12% ordinary-income bracket ends at $100,800 of taxable income. With only the $32,200 basic standard deduction, $133,000 of ordinary gross income would produce $100,800 of taxable income. This simplified illustration excludes adjustments, extra age-related deductions, credits and preferential-rate income. It is not a withdrawal allowance: selling an investment returns basis as well as any taxable gain. ^{[1] [2]}

That is a massive amount of headroom. Most retired couples do not spend $128K a year. The goal is to pull that much out of Traditional each year anyway - spending what you need, converting the rest to Roth. Fill the bracket. Do not leave it empty.

The modern sequence

A hybrid strategy most planners use:

1. Use taxable for day-to-day expenses. Qualified dividends and long-term capital gainscapital gainsThe profit from selling an asset for more than you paid for it. Taxed differently depending on how long you held the asset. get favored tax rates (0%, 15%, 20%). In the 0% LTCGLong-Term Capital Gains (LTCG)Profit from selling an asset held over one year, taxed at lower preferential rates than ordinary income.Full definition bracket, selling appreciated shares is free.
2. Fill lower brackets with Traditional withdrawals. Each year, pull enough Traditional to hit the top of the 12% bracket. Spend what you need, convert the rest to Roth.
3. Keep Roth for late-life insurance and heirs. Qualified Roth withdrawals are tax-free, and Roth IRAs have no owner-lifetime RMDs; inherited accounts and nonqualified distributions have separate rules. ^[3] Use them in emergencies or high-income years where an extra Traditional withdrawal would push you into a bad bracket.

How Bitcoin fits

Bitcoin in a taxable brokerage held more than 12 months is a long-term capital gain. For 2026, the 0% LTCG bracket runs up to approximately $49,450 for single filers and $98,900 for married filing jointly.

That means a retired married couple with no other income can realize $98,900 of long-term capital gains on top of the standard deduction - including Bitcoin gains - and pay zero federal tax. This is staggering. A $98K realized Bitcoin gain in the 0% bracket vs. a 24% bracket is $23,520 of direct tax savings per year (24% is the ordinary-income rate; against the 15% long-term rate that applies above the 0% band, the saving is $14,700).

The technique is sometimes called "tax gain harvesting": sell appreciated Bitcoin (or stocks) up to the 0% LTCG threshold, rebuy immediately (no wash-sale issue for either gains or Bitcoin), reset your cost basiscost basisWhat you originally paid for an asset. Used to calculate how much profit (or loss) you made when you sell.Full definition tax-free. Then you have a higher basis going forward, reducing future tax.

Coordinating with RMDs and Social Security

RMDs at 73 and Social Security (when claimed) both add to taxable income you cannot easily avoid. Once both are running, your room for low-bracket bracket-filling shrinks dramatically.

Planning rule: do your heaviest Roth conversions before Social Security starts. If you are delaying SS to 70, that gives you a big window from retirement through 69 where your income is naturally low. Use it.

Real example walkthrough

A 65-year-old retired couple with $500K taxable, $1M Traditional IRA, $500K Roth IRA. They need $70K/year to live. No Social Security yet (delaying to 70). No pension.

By age 70, they have moved ~$300K from Traditional to Roth at 10% effective rate. Their remaining Traditional balance is smaller, making future RMDs much more manageable. Their Roth has grown substantially. They are on track to keep their retirement effective tax rateeffective tax rateYour actual average tax rate, total tax paid divided by total income. Always lower than your marginal rate.Full definition in single digits for life.