Insights from Erin Itkoe, President of Luminescent Wealth Management
This article was originally published on the Journal of Accountancy website. Link to the full article: https://www.journalofaccountancy.com/issues/2026/jan/tax-efficient-drawdown-strategies-in-retirement/
Retirement planning does not end when the paychecks stop. In many ways, it becomes more complex. The shift from accumulating assets to drawing them down requires careful coordination between cash flow needs, tax strategy, investment structure, and long-term goals.
In a recent Journal of Accountancy article exploring tax-efficient retirement drawdown strategies, Erin Itkoe, President and Wealth Adviser at Luminescent Wealth Management, contributed expert insight on how thoughtful planning can materially improve retirement outcomes.
The article underscores a core principle of retirement planning: how and when retirees withdraw funds can have a meaningful impact on taxes, portfolio longevity, and the assets ultimately left to heirs.
From Accumulation to Distribution, A Critical Mindset Shift
A central theme of the article is the transition retirees must make from earning and saving to managing withdrawals across multiple account types, each with different tax treatments.
As Erin explains,
“Part of the overall planning process is a cash flow analysis that includes retirement goals, such as travel and gifting, how to draw from investments to fund the spending, and the likely tax brackets you will be in during retirement.”
Rather than viewing accounts in isolation, effective drawdown planning evaluates taxable, tax-deferred, and tax-free assets together, modeling how withdrawals affect income taxes over decades, not just in a single year.
Why Tax-Efficient Drawdowns Matter
The Journal of Accountancy article highlights a common but costly mistake, failing to actively manage tax brackets throughout retirement. Without proactive planning, retirees can unintentionally move from lower to higher tax brackets later in life, often due to required minimum distributions.
Erin emphasizes the importance of smoothing income over time, noting,
“Retirees should pay attention to their tax brackets and how much they will have to draw to first fill up the lower brackets to smooth out income.”
This approach can reduce lifetime taxes, preserve portfolio value, and create greater flexibility as retirement evolves.
Required Minimum Distributions and Ongoing Compliance
The article also addresses the growing complexity around required minimum distributions and regulatory reporting. Understanding when RMDs begin, how they are calculated, and the consequences of errors is essential.
As Erin explains,
“Account custodians must provide a notice to IRA holders each year that either calculates or offers to calculate the RMD based on the year-end market value of the accounts. Account custodians also must inform the IRS on Form 5498 that an RMD is required from the account. Form 1099-R is filed for each person who has received any type of distribution, and the IRS cross-references those amounts to amounts that should have been taken.”
These requirements make coordination between financial planning, tax planning, and recordkeeping especially important as retirees age.
Withdrawal Order, One-Off Expenses, and Health Care Costs
Another key takeaway from the article is that there is no universal withdrawal order that works for every retiree. The optimal strategy depends on tax brackets, mandatory distributions, cash flow needs, and estate goals.
Erin notes,
“Generally, the plan should be drawing from accounts subject to RMDs, like IRAs, first if you are required to take RMDs; then taxable accounts; and then tax-free accounts. If you have heirs you plan to pass assets to, tax-free assets may be the best ones to have left.”
She also addresses how large, one-time expenses and health care costs should be evaluated through a tax lens, including the potential role of Roth distributions, portfolio-based borrowing, and health savings accounts.
On Medicare planning, Erin highlights the long-term implications of income levels, explaining,
“The government looks back to two years’ prior tax returns to determine whether your income exceeds threshold amounts, and, if so, there will be an income-related surcharge to the Part B and D Medicare premiums.”
Proactive Planning Starts Earlier Than Most Expect
A consistent message throughout the article is that the most effective retirement drawdown strategies are built years before retirement begins. Decisions made in one’s 40s and 50s around savings vehicles, Roth strategies, and portfolio structure can significantly influence taxes, Social Security benefits, and Medicare premiums later on.
As Erin advises,
“The key to all these strategies is thinking about all of them proactively because there is nothing more powerful than considering the impact of your choices today when you are in your 40s, rather than when you are in your 60s, when all these things will come at you.”
Read the Full Journal of Accountancy Article
This summary highlights only part of a comprehensive discussion on retirement drawdown planning. The full article includes detailed scenarios, modeling examples, and additional expert perspectives.
Originally published on the Journal of Accountancy website. Link to the full article: https://www.journalofaccountancy.com/issues/2026/jan/tax-efficient-drawdown-strategies-in-retirement/
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