So you’re an old geezer and you’re ready to start enjoying all the money you saved up for retirement. If you’re under 70.5, this is the order you should spend your assets in, according to the Autumn 2007 Vanguard report:
2. Tax-deferred (from traditional IRAs or 401(k) and other employer plans)
3. Tax-free (from Roth IRAs or Roth employer plans)
The idea is that you want your tax-free income to have the chance to grow and compound as much interest as possible before tapping it. After you’re 70.5, the IRS requires you to withdraw a certain amount from your employer plans and traditional IRAs. You’ll want to spend those withdrawals down first before tapping into your taxable accounts.