What is the Best Sequence of Withdrawals Under the OBBBA?
The conventional wisdom once dictated that retirees should exhaust taxable brokerage accounts first, followed by tax-deferred IRAs, and finally Roth accounts. In the 2026 environment, this linear approach is often suboptimal.
Instead, consider “bracket filling.” This involves taking distributions from different tax buckets simultaneously to keep your taxable income within a specific range. For 2026, married couples filing jointly can potentially leverage the 0% long-term capital gains rate if their taxable income remains below $98,900. By intentionally pulling from a mix of accounts, you can fill lower tax brackets without being pushed into a higher tier by a single large IRA distribution later in life.
How to Optimize Executive Benefits for Pre-Retirement Planning
It’s important to understand how your planned retirement date will affect restricted stock vesting. Many companies have an age and/or time served requirement that will allow vesting to continue after you retire. We have seen many cases where one more year can provide significantly more retirement income by allowing for continued vesting of restricted stock. Additionally, any deferred compensation plans should be reviewed well before your planned retirement date to ensure the funds are being distributed in a tax-efficient manner in conjunction with other retirement income sources.
How to Use a Three-Bucket Approach to Asset Strategy
As you move from accumulation to drawdown, your strategy should be supported by a diversified portfolio with multiple layers. This is partially about reducing risk but it’s also about segmenting your wealth by its purpose to neutralize the psychological noise of market cycles.
- The Liquidity Layer: Assets needed for the first year or two are held in cash or equivalents. In 2026, with the Fed maintaining a neutral rate stance, this layer helps prevent you from being a forced seller during a period of market volatility.
- The Lifestyle Layer: A diversified portfolio of fixed income and core equities provides your paycheck. This layer acts as a buffer, refilling your Liquidity Layer as needed.
- The Growth Layer: High growth equities asset classes remain the engine, ensuring your spending power outpaces 2026 inflation rates over a 30-year horizon.
Moving Forward: Next Steps for Your Retirement Tax Planning
A five-year window is long enough to make massive structural changes to your tax liability, but short enough that every month of indecision carries a price tag. Regardless of your age, if you are within 60 months of your professional exit, your strategy needs to be OBBBA-compliant and optimized for 2026.
At WealthCrossing, we believe defining success is not primarily about the number in your account, but about how effectively those resources empower your best life. A tax-efficient drawdown strategy is the bridge between a career well-spent and a retirement well-lived.
Are you ready to stress-test your five-year plan? Schedule a conversation with our team.
Sources
https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill
https://www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500
https://www.irs.gov/pub/irs-drop/n-23-62.pdf
https://www.irs.gov/pub/irs-drop/n-25-67.pdf
https://www.congress.gov/bill/117th-congress/house-bill/2617
https://bipartisanpolicy.org/explainer/salt-deduction-changes-in-the-one-big-beautiful-bill-act/
