The old rule built a tax bomb. The new rule defuses it annually.
The old rule, now outdated. Decades of planning guides said: taxable first, Traditional second, Roth last — let the tax-advantaged accounts keep compounding. It sounds right, and it quietly sets a fuse.
The problem with spending taxable first is that at age 73 the RMDs on your untouched Traditional IRA balloon into the highest brackets — exactly when you can’t avoid them.
The smarter rule: fill the bracket. Between roughly 62 and 72 — after the paycheck stops, before RMDs start — most retirees sit in a low bracket, often 12% or 22% after the standard deduction. Those are the gap years, and the move is to deliberately draw from the Traditional IRA to fill the low brackets every year. Each dollar out at 12–22% is a dollar that will never be forced out at 32%. The figure below is the whole idea on one chart.
Fill the Bracket — The Gap Years vs. the RMD Spike
The worked example. Same household, same $80K of spending at 65 — the only difference is which bucket funds it:
| Scenario | Old Rule (Tax Last) | New Rule (Fill Bracket) |
|---|---|---|
| Age 65 income | $80K from brokerage (low tax) | $80K mix: $40K IRA + $40K brokerage |
| Age 73 RMD amount | $95,000 (huge tax) | $52,000 (manageable) |
| Marginal bracket at 75 | 32% | 22% |
| Lifetime taxes paid | $520,000 | $375,000 |
| Savings | — | $145,000 |
RMD basics, 2026 rules. The first RMD is due by April 1 of the year after you turn 73 — then December 31 every year after, which means waiting on the first one doubles up year two. Those born in 1960 or later start at 75 instead (SECURE 2.0, from 2033). The formula is the prior December 31 balance divided by the IRS Uniform Lifetime Table factor; the penalty for missing one is a 25% excise tax, reduced to 10% if corrected within two years.
| Age | Factor | Age | Factor | Age | Factor |
|---|---|---|---|---|---|
| 73 | 26.5 | 80 | 20.2 | 87 | 14.4 |
| 74 | 25.5 | 81 | 19.4 | 88 | 13.7 |
| 75 | 24.6 | 82 | 18.5 | 89 | 12.9 |
| 76 | 23.7 | 83 | 17.7 | 90 | 12.2 |
| 77 | 22.9 | 84 | 16.8 | 92 | 10.8 |
| 78 | 22.0 | 85 | 16.0 | 95 | 8.9 |
| 79 | 21.1 | 86 | 15.2 | 100 | 6.4 |
IRS Uniform Lifetime Table, key ages. Divide the prior year-end balance by the factor for that year’s RMD.
Roth conversions — the biggest lever in the toolbox. The gap years are also the conversion window: from the year after you retire through the year before RMDs start, you can move Traditional IRA dollars to Roth at low brackets. Pay the tax now at 12–22%, skip the bigger bill later, and leave tax-free money to heirs — which, after the SECURE Act put non-spouse beneficiaries on a ten-year drain clock, is worth more than it used to be. The discipline: convert enough each year to fill the 12% and 22% brackets without spilling into 24%.
| 2026 Bracket | Married Filing Jointly Income |
|---|---|
| 10% | $0 – $24,800 |
| 12% | $24,800 – $100,800 |
| 22% | $100,800 – $211,400 |
| 24% | $211,400 – $403,550 |
| 32% | $403,550 – $512,450 |
2026 federal brackets, married filing jointly — full tables for every filing status are on the 2026 tax numbers page.
Qualified Charitable Distributions. From age 70½, you can send up to $100,000 a year directly from an IRA to charity. It counts toward the RMD but never touches your AGI — which trims Medicare IRMAA surcharges, Social Security taxability, and state income tax in a single move. If you give to charity anyway, this is the most efficient dollar you own.
The order of withdrawals is a decision, and not making it is also a decision — one the IRS makes for you at 73. Fill the bracket in the gap years, convert what the 22% bracket will hold, point charity at the IRA, and save the low-basis stock for the step-up. Same portfolio; three to five more years of income.
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