I've researched this quite a bit. First, here are some links:
Bogleheads Thread: http://www.bogleheads.org/foru....hp?t=40339
Dale Maley's Website: http://dalemaley.webs.com/misc.htm
Bogleheads Thread: http://www.bogleheads.org/foru....hp?t=33613
Richard's spreadsheet: http://public.sheet.zoho.com/p....ps-wdraw-2
Bogleheads Thread: http://www.bogleheads.org/foru....hp?t=32199
So I (Bob, not me) decided to delve into this subject and build my own spreadsheet:
In my analysis, I (Peter) constructed a number of different scenarios based on current tax rates and expected future tax rates. It is a few pages in length so I'll just copy the introduction and the first scenario here. If you want the whole thing I can PM it to you.
Tax Efficient Withdrawal Strategies/Scenarios
The rule of thumb for withdrawal strategies is that if one has both taxable and tax deferred accounts, it is better to withdraw from the taxable accounts first and let tax deferred accounts (and Roth IRAs) continue to grow. The two general exceptions to this rule is when the retiree is required to take a minimum distribution, and whenever the retiree is in an unusually low tax bracket. A 2006 TIAA-CREF institute paper by William Reichenstein , Tax-Efficient Sequencing of Accounts to Tap in Retirement shows that applying these principles can increase account longevity by 2.5 to 3.0 years. (This is on the Wiki.)
The case analysis assumes a 25% ordinary tax rate and a 15% capital gains rate for a married couple receiving social security.
Tax Efficient Withdrawal Strategies/Scenarios flow chart is a guide, not an absolute. Its purpose is to pick up where Reichenstein left off.
Possible Tax Efficient Withdrawal Strategies: 6 profiles. A sample profile:
• High income/taxes now - High income later
• You are retired but not yet drawing social security.
• You have more money in your taxable accounts than in your tax deferred accounts. You are in a relatively high bracket and will continue to be in a relatively high tax bracket when you begin social security withdrawals.
Primary withdrawal strategies:
• Withdraw funds as needed for living expenses from your taxable account. Unless you 1) can control your annual income and are able to lower it (no defined pension for example) 2) have a very high tax bracket when you start your RMDs and/or 3) you wish to leave substantial assets to your heirs, it is likely not to be to your advantage to convert tax deferred funds to a Roth.
• Once you start receiving social security, follow scenario D or E, whichever is appropriate.
• Exception: If you have more funds than you will need in your lifetime, withdraw from your tax deferred funds first to allow your heirs to receive your taxable funds on a stepped up basis.