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I have never owned mutual fund shares myself, but my DW had a T Rowe Price fund in a taxable account when we got married in 2000. Every year I get a reminder of why I had shunned mutual funds when the capital gains statement arrived. I never sold because I didn't want an even worse tax problem. It was a minor annoyance for a while but lately the cap gains are becoming a moderate annoyance. I have vowed to drain that account first when I retire.

My question is: how will any withdrawals be allocated to taxable and untaxable amounts. Right now I can see that 56% of the balance is classified as "income" (already taxed) and 44% is "market fluctuations". Will withdrawals be allocated proportionally? Or can I withdraw all of the "income" first if I choose?
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