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Updated July 30, 2026. Quick answer (2026): A Roth withdrawal costs nothing today, which is precisely why a naive single-year optimiser drains it first. It goes last because its value is the tax-free growth you give up, which never appears in this year’s tax bill.
Knowing when to break the rule is the valuable part.
Roth-last is right until it is not, and the exceptions are specific.
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The account that costs nothing is the one you should not spend
A Roth withdrawal produces no taxable income. Rank purely on this year’s tax bill and Roth wins every comparison, which is exactly why a naive optimiser empties it first. We wrote that bug deliberately-looking version of the engine and caught it with a test, because it is the natural output of the arithmetic.
The value is in what you give up, and it never shows up in this year’s tax
A dollar left in a Roth compounds tax-free for the rest of your life and passes to heirs without income tax. Spending it converts a permanently tax-free asset into cash to avoid a one-off tax you would have paid anyway from somewhere else. The cost is real and entirely invisible to a single-year calculation.
Three cases where last is not last
- An IRMAA cliff. A Roth withdrawal adds no MAGI, so it is the clean way to fund the slice that would otherwise cross a threshold.
- A large one-off need that would otherwise push you several brackets up in a single year.
- Preserving a 0% capital gain year, where taking Roth instead keeps taxable income under the threshold.
Each is a deliberate exception with a stated reason. That is different from a tool silently draining the account because the current-year number looked good.
The general rule, stated properly
Roth goes last not because it is expensive today but because it is the most valuable dollar you own tomorrow. Sequencing decisions that only look at this year will systematically get this one wrong.
Related
Methodology
- This is a single-year, deterministic comparison of the marginal tax cost of one more dollar from each account type. It does not project returns, future brackets, or a lifetime drawdown path, because those depend on assumptions no calculator can verify.
- Every rate is a USER INPUT. Ordinary brackets, long-term capital gain brackets and IRMAA tiers are all indexed annually, so none of them is hardcoded anywhere in this cluster.
- A required minimum distribution is taken first because it is mandatory, not because it is cheapest. Roth is placed last regardless of the single-year arithmetic, which would otherwise drain it first.
- Figures were computed by two independently written engines that agree to the cent, with invariants asserting RMD-first ordering, Roth-last ordering, and that a shortfall is reported rather than silently satisfied.
- Federal only, and excludes state tax, the taxation of Social Security benefits, and ACA premium credits.
Educational estimate, not tax advice. Confirm anything that changes a filing or distribution decision with a CPA.
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