When it comes to creating the most tax-efficient withdrawal strategy for your retirement accounts there are just four simple steps to follow according Michael Kitces, publisher of the Nerd's Eye View blog and The Kitces Report.

But it starts first, Kitces said during a presentation at the Investments & Wealth Institute's annual conference, with creating a retirement spending plan. And that plan consists of five elements:

    Setting goals

    Assessing risk tolerance

    Creating an investment policy statement, or IPS

    Establishing a withdrawal strategy

    Implementing your portfolio and making annual adjustments

    And establishing a withdrawal strategy, according to Kitces, consists of four elements:

    Identify Sources of Cash Flow and Related Costs

    "The first is figuring out what is your strategy for making the cash flows appear," Kitces said during an interview. "How are you going to actually make sure, after working 40 years where paychecks showed up in your bank account every two to four weeks, now there's no more paychecks. How are you going to make the check, the cash, show up in your bank account every two to four weeks?"

    To do that, Kitces said most advisers are using one of three strategies: One, investing for income. In essence, you're buying the yield you need to succeed, and spending it as received. With this strategy, you would invest in bonds, dividend-paying stocks, REITs and MLPs. "Cash comes in, spend the cash," he said. "Pretty straightforward and the principal just kind of sits off to the side."

    The second strategy, is called the capital gains top-up. With this strategy, you would invest in a balanced portfolio of stocks and bonds; sweep interest income and dividends to cash; distribute cash as needed; and liquidate capital gains (or principal) to top up the cash. This strategy, however, requires more year-by-year monitoring to manage, Kitces said.

    And the third strategy, is called the fully-invested total return. With this strategy, you would invest in a diversified growth-oriented portfolio, reinvest dividends and interest as paid, and liquidate to generate cash as needed. This strategy, according to Kitces, requires low transaction costs and is not conducive to client psychology.

    Determine How to Withdraw Money

    Kitces calls this account sequencing. It's about how you're going to manage your tax rates through your retirement to equalize the distributions from your various accounts.

    One challenge, he says, is that investors commit the sin of too much tax deferral. "We like tax deferral, but there actually is such thing as being too good at tax deferral," said Kitces.

    This step also requires that you find you tax equilibrium. "How do we balance our tax rates so that we don't take so much today that it's really low in the future," he asked.

    And once you know what you're aiming for you you've got lots of tools: You can take distributions from your IRA when you're in a low tax bracket and do partial Roth conversions, for instance. "And then later (you'll)have a mixture of tax-free, and pre-tax, and investment accounts," he said. "Where that equilibrium rate target is really varies depending on your situation, your wealth... but the essence of it is the same across the board, which is we want to create enough income now that we don't bunch it all into the future of higher tax rates, but we don't want to create so much income now that we waste the opportunity to just get it up cheaply and finding that balancing point is the key."

    Right Assets in the Right Accounts

    It's possible that you'll have three types of accounts: tax-deferred, tax-free and taxable; and many different types of investments. Which investments do you place in which accounts? In essence, he recommends putting the least tax-efficient, highest expected return investments (emerging markets funds, sector rotation funds, commodities) in your Roth IRA and traditional IRA and the most tax-efficient, highest expected return investments (S&P 500, MSCI EAFE International, and MLPs) in your taxable account.

    Make Annual Strategy Adjustments

    And last, a withdrawal strategy must be dynamic. "You have to monitor this on an annual basis," Kitces said. "As investment expectations change where you put those assets may shift... it's not a static process. It's not a set-and-forget. You still have to manage some of this on an ongoing basis because there's essentially tax alpha opportunities every year, year by year."

    It's never too late - or too early - to plan and invest for the retirement you deserve. Get more information and a free trial subscription toTheStreet's Retirement Dailyto learn more about saving for and living in retirement. Got questions about money, retirement and/or investments? EmailRobert.Powell@TheStreet.com.

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