After age 70 1/2 you don't have a choice, you must make Required Minimum Distributions from traditional IRA accounts. So we're really talking about two distinct periods, the years before RMDs and the years after you start RMDs.
Suppose, for instance, that you are 65, retired and taking Social Security benefits. The optimal tax strategy would be to take regular IRA withdrawals up to the amount that would cause (a) your benefits to be taxed and (b) your income tax rate to exceed 15 percent. Above that amount, you would make Roth withdrawals. Combining withdrawals in this way could (operative word COULD) work to reduce your RMDs later and, hence, reduce your exposure to benefit taxation and a higher tax rate.
How large a difference does any choice make for your lifetime spending? Not big--- whatever choice you make, it won't transform your retirement. Kotlikoff and I made a good number of calculations exploring this choice as exercises for "Spend Til' the End"--- our new book on financial planning to be published by Simon & Shuster next June--- and we found that no single choice made a powerful difference in lifetime consumption.
Scott
