According to experts, withdrawing money from retirement accounts at the wrong time could lead to serious tax consequences. There is a need of a withdrawal strategy for maximum benefits from retirement income. The standard approach to withdraw retirement funds generally follows this progression:

1. If you are older than 70½, then you should take any required minimum distributions (RMDs) from your traditional IRA or 401(k)s. Calculate RMD by using age and the value of your account.

2. People can spend from any investment portfolio that is not part of an eligible retirement plan or tax-deferred annuity. Tapping these accounts will give low total tax liability.

3. People can begin withdrawing from tax-deferred accounts like variable or fixed annuities or retirement plans like a traditional IRA or 401(k).

This strategy can be a good start. Some more factors can be considered like projected spending at various stages of retirement, whether withdrawals from your many retirement accounts are taxable, total projected income and tax liability. It has been suggested to concentrate on tax bracket year by year.

According to the experts, there is another strategy for a year when person is in a lower tax bracket, people can covert some funds in traditional IRA to a Roth IRA. Pay taxes on the withdrawal at the lower rate. The future profits in the Roth are not taxed.

These are easy and common examples. People withdrawal strategy should fulfill their particular needs and if possible, with the help of a tax advisor. People must do a balance and tax estimate toward the end of each year so that they have enough time to make beneficial withdrawals or conversions.