Retirement tax and withdrawal sequencing
Which account you draw from changes the tax you pay, and the tax you pay changes how much you must withdraw. This engine solves that loop: it forces the required minimum distribution, draws taxable first, then tax-deferred, then Roth, and prices a Roth conversion at the margin — with the bracket arithmetic shown band by band.
| Bracket | Income in band | Tax |
|---|---|---|
| 10% | $0.00 – $8,770 | $877.03 |
Taxable Social Security $0.00 from $0.00 of benefits. State tax, IRMAA and ACA remain outside this model.
RMD = balance / divisor(age) · Uniform Lifetime Table, from age 73.
min(85% × benefits, worksheet amount) · IRS Pub. 915 Worksheet 1: provisional income includes half of benefits, other income and tax-exempt interest.
max(0, ordinary − total deductions) · Ordinary = deferred withdrawals + conversion + other taxable income + taxable Social Security.
Σ band × rate · Each band is taxed at its own rate; the last band sets the marginal rate.
W = max(0, spending + tax(W) − cash income) · The account withdrawal depends on tax, which depends on the withdrawal.
A clear path from inputs to results.
Retirement withdrawals are taxed in the order you choose, and the tax you owe changes how much you have to withdraw. This engine solves that loop for one year: it forces the required minimum distribution, draws taxable money first, then tax-deferred, then Roth, and shows the bracket arithmetic behind the bill — including what an extra Roth conversion actually costs at the margin.
How to use
- Choose the filing status and enter each eligible spouse's age at the end of the tax year.
- Enter the balances in the taxable, tax-deferred and Roth accounts.
- Set the spending you need after tax — not the gross withdrawal.
- Add cash income such as a pension, plus Social Security benefits from SSA-1099 box 5 and tax-exempt interest if applicable; entered cash income is applied to spending before accounts are drawn.
- Add a Roth conversion amount to see its marginal cost before you commit.
The formula
Reference: IRS Rev. Proc. 2024-40 and Rev. Proc. 2025-32 (2025 brackets and deductions); IRS Pub. 915 Worksheet 1 (taxable Social Security); Uniform Lifetime Table, Treas. Reg. §1.401(a)(9)-9; SECURE 2.0 RMD start age of 73.
Worked example
Age 75, $800,000 tax-deferred, $60,000 of after-tax spending
- Single filer, age 75.
- Taxable $200,000 · tax-deferred $800,000 · Roth $100,000.
- Spending needed after tax $60,000, no other income or Social Security.
- 1
RMD: 800,000 / 24.6 = $32,520. It is mandatory even though spending is higher.
- 2
Spending is $60,000, so the plan needs about $60,877 gross cash once tax is included.
- 3
Taxable account covers the rest: about $28,357, because it is drawn before more tax-deferred money.
- 4
Ordinary income is the $32,520 RMD. The $15,750 standard deduction, $2,000 age deduction and $6,000 enhanced senior deduction leave about $8,770 taxable.
- 5
Tax is about $877 at the 10% bracket rate; the effective rate on ordinary income is 2.7%.
- 6
With a $50,000 Roth conversion, federal tax rises to about $7,943. The next conversion dollar costs 23.32% at the margin because income is in the 22% bracket and the senior deduction is phasing out.
RMD $32,520 · federal tax $877 (2.7% effective) · a $50,000 conversion brings total tax to about $7,943 and the next dollar costs 23.32% at the margin.
Interpreting the result
The interesting number is not only the total tax, but also the marginal rate. The calculator applies IRS Publication 915 Worksheet 1 to the entered Social Security benefits, then includes the taxable portion in ordinary income. It also applies 2025 age-based deductions and the enhanced senior deduction. A Roth conversion is a non-cash transfer: its principal does not fund spending, while its tax is included in the cash gross-up. The conversion chart shows the next-dollar marginal rate, including bracket changes and the senior-deduction phaseout.
Assumptions & limitations
- Federal tax only, tax year 2025, one year at a time. Social Security taxability uses IRS Publication 915 Worksheet 1 for single and married-filing-jointly returns. State income tax, local tax, IRMAA Medicare surcharges, ACA premium credits and married-filing-separately cases are not modelled.
- Entered other cash income, Social Security benefits and tax-exempt interest fund spending before account withdrawals. Roth conversion principal is a non-cash transfer; conversion tax is included in the gross-up.
- Taxable-account withdrawals are treated as return of basis, so they generate no capital-gains tax. A real account with embedded gains would produce some long-term capital gain.
- The standard deduction and age-based 2025 deductions are used; the enhanced senior-deduction phaseout uses ordinary income as a MAGI proxy. Itemised deductions, above-the-line adjustments and credits are not applied.
- The RMD uses the Uniform Lifetime Table and assumes the account owner is the sole account holder; spousal-beneficiary exceptions and inherited-account rules are out of scope.
- The 2025 parameters are published in the source code and shown in the interface. Verify them against the IRS publications and revenue procedures before relying on the result for a filing decision.
Frequently asked questions
Why does the tool ask for after-tax spending instead of a withdrawal amount?
Because spending is what you actually control. If you enter a gross withdrawal, the tax comes out of it and your lifestyle silently shrinks. Solving for the gross figure that funds the spending you specified is the honest direction of the calculation.
What is the difference between the effective and marginal rate here?
The effective rate is total tax divided by gross ordinary income. The marginal rate is what the next dollar costs. Conversions, extra withdrawals and RMDs are all marginal decisions, so the marginal rate is the one to act on.
Does this replace a tax preparer?
No. It is a planning model with a single-year federal scope. Multi-year Roth ladders, IRMAA cliffs, state tax, return adjustments, credits and special Social Security cases can change the answer, and those need a full projection or a qualified adviser.
Why is the taxable account drawn before the IRA?
It is the common default because taxable withdrawals are assumed to be basis and therefore untaxed, which keeps ordinary income — and the RMD bracket — low. It is not always optimal: large embedded gains, or a year with unusually low income, can make a different order cheaper. The engine shows the arithmetic so you can test the alternative.
Why does a $50,000 conversion cost more than 12%?
Because the conversion stacks on top of the RMD. It fills the remaining 12% band and then spills into the 22% band, so the blended marginal cost rises. The conversion chart plots exactly where those steps occur.
Methodology last reviewed 2026-10-20. Results are informational and not financial or engineering advice — see our disclaimer.