When the big day comes when work is done and retirement begins, many workers will face a decision that will impact how long their money will last in retirement - what to withdraw first.

A study by the State University of New York examined what order of withdrawals from a retirement portfolio was optimal. The results:

-Between taxable stocks and taxable bonds, withdrawing the lower-returning asset first - bonds - meant the portfolio lasted three years longer than if the stocks were withdrawn first.

"It is clearly better to first take distributions from assets that have a lower expected return rather than a higher one," the researchers wrote.

-Between a Roth IRA and a traditional IRA, the decision didn't matter as long as both have equal returns. But if distributions are made throughout changes in income tax rates, such as 15 percent one year and 25 percent another, equal withdrawals from both accounts can extend the life of the portfolio. The overriding factor: withdrawing just enough from the traditional IRA to stay below the next tax bracket before withdrawing the remainder needed from the Roth.

The decision, whether from a taxable account or tax-deferred account, comes down to which one has the potential to grow more during retirement. In most markets, that would be accounts holding stocks no matter if they are taxable or not. Stocks on average can grow 10 percent in 10 years while bonds closer to 5 percent. So using the bond money first gives the stocks longer growth possibilities.

With retirements now lasting 30 years or more, stocks can stay in a retirement portfolio longer. This also helps retirees keep up with inflation, since stocks historically return more than the inflation rate while bonds offer little return above inflation.

READER QUESTION

Question: What is the percent tax to convert a 401k to a Roth IRA? - Patricia

Answer: The tax on conversions is your current income tax rate. The conversion is treated as if it was income, such as wages, since it is really just a deferral of earnings on the job.

As an example, if you make $50,000 and convert $20,000 into a Roth IRA, your income on your tax form will be $70,000 and you will be taxed according to the tax bracket on that amount. That's why some people look for years when their earnings are low or wait for retirement when there are no earnings so they can be in a lower tax bracket.

If you wait until 2010, you can divide the amount over two tax years, so that $20,000 will become $10,000 income in 2011 and $10,000 in 2012, which could keep you in a lower tax bracket.