For most retirees, the tax-efficient liquidation of a retirement portfolio requires coordinating between both taxable brokerage accounts and pre-tax retirement accounts like an IRA or 401(k).

The conventional view is that taxable investment accounts should be liquidated first, while tax-deferred accounts are allowed to continue to compound. In practice, however, it’s possible to be too good at tax deferral, such that the IRA grows so large that future withdrawals — or even just RMD obligations — actually drive the retiree into higher tax brackets.

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