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Would it not be better to use the funds in your IRAs first before touching assets in your regular accounts as assets in "regular accounts" that are left untouched are growing tax deferred and at one's death, the remaining assets would be inherited at a stepped-up basis thus avoiding taxes? (Provided their is no change in the estate tax laws!)

That would be better or not better depending on your goals and your current wealth. If I take money from the taxable account, a big part of it is tax-free return of capital, and the rest is taxed at capital-gains tax rates. This way, IRS gets a fairly small share of my withdrawals. If I take money from the tax-deferred account, all of it is taxed as ordinary income. That way, IRS would get a relatively large share of my withdrawals. So, in the short run, using the taxable account first is preferable. With my goals and assets, that is preferable in the long run also, as I explain next.

I use an Excel spread-sheet for my personal financial planning with a 35 year horizon. (Of course, I have to estimate what investment returns and inflation will be, but I can vary these guesses to see how sensitive the results are.) Based on the built-in optimizing software, Solver in Excel, I use the spread sheet to pick an annual after-tax budget (adjusted annually thereafter for inflation) for myself that keeps the purchasing power of my retirement assets as nearly level as possible. (The resulting withdrawal rates from the retirement assets are in the range of 3% to 4% over the years to cover both income taxes and personal living expenses.) Then, for that budget, I use Solver a second time to pick optimal optional withdrawals from my IRA in my 60's that maximize the size of that final estate. This is a minor effect -- about 2% a year withdrawals from the IRA for a few percentage points extra in the estate at the end of the plan. When my estate was much smaller a few years ago, the optimal optional withdrawals were zero.

You have to estimate your income taxes for each year of the retirement plan to detect this effect. Some people have (correctly) pointed out that the income tax laws will change almost certainly, which will harm the accuracy of your predictions. Well, I can't predict market returns or inflation with certainty either, but that doesn't keep me from making the best (conservative) estimates I can on all these matters, understanding that reality will require some revisions from me.

Your point about the remaining assets being inherited on a stepped-up basis is valid if, unlike me, you are leaving assets to people and, as you warn, that step up is not eliminated along with estate taxes. Actually, I might relent and leave people whatever assets I can up to the tax-free limit.

Chips, who finds it very difficult to pay any tax that can be postponed instead

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