Withdrawal order matters less than which years you use. Required distributions start at age 73 under IRS rules, so the years between your last paycheck and that first forced withdrawal are usually your lowest-income ones. Filling a lower bracket then, or not, changes the tax bill later, and the size of that first distribution.
The conventional order is a reasonable default
Taxable first, then tax-deferred, then Roth. Yes, that sequence does what it is supposed to do. It keeps the tax-sheltered accounts compounding longest and it defers the ordinary income hit, and for a lot of households it is close enough to right that nobody needs to think harder about it.
But it is a default, not an answer, and it has a specific blind spot. Deferring the pre-tax account is not the same as reducing it. The balance keeps growing, and the thing that eventually forces money out of it is calculated off that balance.
What is actually happening in the gap years
Two things move at once between the last paycheck and the first required distribution.
First up. Taxable income usually drops to its lowest point of your adult life. No wages. Social Security possibly not started yet. Whatever comes out of a taxable account is mostly return of basis plus some capital gain, not ordinary income.
Next. The pre-tax balance keeps compounding, untouched, and the required distribution that eventually comes out of it is a percentage of that larger number. According to the IRS, you generally have to start taking withdrawals from an IRA, SIMPLE IRA, SEP IRA, or retirement plan account when you reach age 73 (IRS, Retirement topics - Required minimum distributions, page updated April 2026). The statute moves that to 75 for people who reach age 74 after December 31, 2032, so which age applies to you depends on your birth year and is worth confirming with your CPA rather than assuming.
Here is the arithmetic, and it is hypothetical rather than a projection. A married couple filing jointly in 2026 takes a $32,200 standard deduction, and the 12% bracket for that filing status runs to $100,800 of taxable income (both figures from IRS Revenue Procedure 2025-32, tax year 2026), so roughly $133,000 of ordinary income lands before the 22% rate touches anything (the additional standard deduction for age 65 and older, $1,650 per person in 2026 under that same revenue procedure, moves the number up further). If that couple is living on $70,000 drawn from a taxable account, a large share of the 12% bracket goes unused, and it expires on December 31. Meanwhile a $1.2 million pre-tax balance at age 73, divided by the Uniform Lifetime Table applicable denominator of 26.5 that IRS Publication 590-B (2025 edition) applies at that age, produces a first required distribution of roughly $45,300 whether the income is needed or not.
Keep in mind that unused bracket room does not carry forward. It is the one input in this whole picture that expires on a schedule and cannot be recreated.
Two separate decisions, not one
People tend to tangle these together, so it helps to name the count and split them.
One, the obligation. Once required distributions begin, the amount is set by the prior December 31 balance and the table denominator, and the IRS applies an excise tax of 25% on any amount not withdrawn as required, reduced to 10% if the shortfall is corrected within two years (IRS, Retirement topics - Required minimum distributions, updated April 2026). That is not a planning decision. That is arithmetic you have to do.
Two, the choice. Whether to recognize ordinary income in a gap year, either by withdrawing from the pre-tax account or by converting part of it to Roth, is entirely optional. Nobody makes you. That is exactly why it gets skipped.
Both decisions touch the same balance, but only one of them has a deadline you control.
Where the ceilings actually sit in 2026
The reason gap-year income is a decision rather than a reflex is that there are two separate sets of lines it can cross, and they are not in the same place. Federal brackets are one. The Medicare income-related monthly adjustment amount is the other, and it works on a two-year lookback, so income recognized in 2024 is what sets the 2026 premium.
| Income landmark | Single filer | Married filing jointly |
|---|---|---|
| 2026 standard deduction | $16,100 | $32,200 |
| Top of the 12% bracket (2026 taxable income) | $50,400 | $100,800 |
| Top of the 22% bracket (2026 taxable income) | $105,700 | $211,400 |
| Top of the 24% bracket (2026 taxable income) | $201,775 | $403,550 |
| First IRMAA tier begins (2026 premium, based on 2024 MAGI) | Above $109,000 | Above $218,000 |
| Monthly Part B premium at that first IRMAA tier (2026) | $284.10 | $284.10 |
The lookback is the part people miss. SSA's manual puts the rule plainly: "The higher the beneficiary's range of modified adjusted gross income (MAGI), the higher the IRMAA" (SSA Program Operations Manual System, HI 01101.020, IRMAA Sliding Scale Tables). A single filer sitting at the top of the 22% bracket in 2026 is already above the first IRMAA threshold, which means a bracket that looks fine on the tax return can still move a premium two years out. It is not a dramatic increase at the first tier, but it is a real second line, and it does not sit where the bracket line sits.
Two composite situations
Both of the following are anonymized composites drawn from patterns we see repeatedly. Neither describes a real individual client, and neither is a projection of anyone's result.
At the front end, a composite: someone moves through the stretch between a last paycheck and a first required distribution without drawing down the pre-tax balance at all. Nothing is done to reduce it during those lower-income years, so it keeps compounding. Once required distributions begin, the forced withdrawal is larger than the income actually needed, and the size of it traces back to years that are no longer available.
At the back end, a second composite: a household in their 70s whose required distributions turn out larger than the income they need to live on, so the excess simply accumulates in savings.
Same mechanism, two vantage points. Neither situation involved a mistake in the usual sense. The withdrawal order was the conventional one and it worked exactly as designed. The point is narrower than that: the low-income window is temporary, and not using it is itself a decision with a cost, just a quieter one than the alternative.
When leaving the pre-tax balance alone may be the better call
Recognizing income early is not automatically right either, and treating it as a settled strategy is the same error in the other direction.
Partial conversions in the gap years normally do not carry their weight when the timeframe to recoup the tax paid up front is long relative to the money's remaining time horizon. But if the goal is leaving tax-free money to heirs rather than optimizing your own lifetime bill, the math flips and the conversion can be viable. Same for heirs in higher brackets than yours, where paying tax at your rate instead of theirs could be the cheaper of the two.
Some conditions cut the other way. If you retired before Medicare and are buying coverage on an exchange, extra recognized income may raise what that coverage costs, which can swamp the bracket arbitrage entirely. If large deductible medical costs are likely later, pre-tax withdrawals in those years could come out at a very low effective rate, and pulling them forward now gives that up. If charitable giving is already part of the picture, there is a route that moves money out of an IRA without adding it to income, and its age and annual limits are worth confirming with your CPA before assuming eligibility.
Any of these is enough to change the answer. That is the honest version. What none of them change is the calendar.
Things worth confirming before any of this is actionable
Not a strategy list. A list of what has to be known first.
- Confirm with your CPA which applicable age governs your first required distribution, since birth year determines whether 73 or 75 applies.
- Evaluate every pre-tax balance in one place, including balances still sitting at former employers. Old accounts are easy to leave out of the total and they still count toward what gets forced out later. If one of yours is unaccounted for, what to actually do with a found 401(k) covers the mechanics.
- If a pension election is still open, evaluate how each option changes ordinary income during the gap years, because that choice can consume the same bracket room. Lump sum versus annuity walks through how that decision gets made.
- Confirm the Social Security start date you are planning on with your advisor, since claiming inside the gap years changes how much room is left.
- Evaluate the two-year IRMAA lookback against any year you are considering recognizing extra income, with your CPA or advisor.
The sequencing question sits alongside required distributions, Roth conversions, Medicare, and Social Security timing, and those decisions land close enough together that they are hard to solve one at a time. BAS's Ten-Year Retirement Window resource explains the eight decisions that concentrate in the decade around the day you stop working, and how they interact.
Questions people actually ask about this
When do required minimum distributions actually start?
The IRS states that you generally have to start taking withdrawals from a traditional IRA, SEP IRA, SIMPLE IRA, or retirement plan account when you reach age 73 (IRS, Retirement topics - Required minimum distributions, updated April 2026). The statute moves the applicable age to 75 for individuals who reach age 74 after December 31, 2032. Which one applies depends on your birth year and is worth confirming with your CPA.
Is taxable first, then tax-deferred, then Roth the wrong order?
Not wrong. It is a default that works for many households. It just does not address what happens to the pre-tax balance while it is being deferred, which is that it keeps compounding and the eventual required distribution is calculated from it.
What are the gap years?
The stretch between the last paycheck and the first required distribution. Ordinary income is often at its lowest point during that window, which is why the decision about whether to recognize income in it exists at all.
Can taking more income in the gap years raise my Medicare premiums?
It can, and on a delay. IRMAA uses a two-year lookback, so 2024 modified adjusted gross income is what determines 2026 premiums. For 2026, the first tier begins above $109,000 for a single filer and above $218,000 for married filing jointly, with a Part B premium of $284.10 per month at that tier (SSA Program Operations Manual System, HI 01101.020, IRMAA Sliding Scale Tables, transmittal 36, December 2025).
How is the required distribution amount calculated?
The prior December 31 account balance divided by an applicable denominator from the IRS life expectancy tables. IRS Publication 590-B (2025 edition) applies a denominator of 26.5 at age 73 under the Uniform Lifetime Table. Which table applies depends on your situation, including whether a spouse more than ten years younger is the sole beneficiary.
What happens if the required distribution is not taken?
The IRS applies an excise tax of 25% on the amount not distributed as required, reduced to 10% if the shortfall is corrected within two years (IRS, Retirement topics - Required minimum distributions, updated April 2026).
If you want to look at your own window
The Ten-Year Retirement Window guide covers the eight decisions that cluster in the decade around your last paycheck, including income sequencing, required distributions, Roth conversions, Medicare, and Social Security timing. Request it from that page and it comes to you by email. If it is easier to just talk through where your own gap years fall, that conversation is a complimentary review and fee is discussed there.
How many years are actually left in your window?
This material is provided for educational and informational purposes only and should not be construed as a recommendation or individualized advice. The withdrawal, Roth conversion, tax-planning, and retirement strategies discussed may not be appropriate for all individuals. Examples contained herein are hypothetical and are intended solely to illustrate general concepts. Actual results will vary based on individual circumstances, investment performance, account balances, tax rates, and legislative changes. Tax laws, Medicare regulations, and retirement account rules are subject to change. Investors should consult with their tax advisor, attorney, and financial professional before implementing any strategy discussed. Investing involves risk, including possible loss of principal.