401(k)s and IRAs: Grow your money, shrink your taxes

While planning for retirement takes plenty of preparation, tapping into your nest egg requires just as much care and strategy.

The rule of thumb for most investors to follow involves spending your taxable savings first, allowing your IRAs and 401(k)s to keep growing. But sometimes it's necessary to break this rule.

Say you have highly appreciated stocks and funds in taxable accounts that you don't need for income and want to leave to your heirs. You'll pay high taxes if you cash them in, while your heirs will get the benefit of a stepped-up cost basis (and thus a lower tax bill). If so, move on to tax-deferred accounts like a 401(k) or IRA.

Or if you expect your taxable income to fall in a given year, take advantage of your lower-than-usual tax rate. Bypass step one and withdraw funds from your 401(k) or IRA.