Retirees With $1.2 Million 401(k)s Hit $45,283 RMD Tax Trap at 73
Updated
Updated · 24/7 Wall St. · Jun 13
Retirees With $1.2 Million 401(k)s Hit $45,283 RMD Tax Trap at 73
1 articles · Updated · 24/7 Wall St. · Jun 13
Summary
$45,283 is the first required minimum distribution for a married couple turning 73 with $1.2 million in a traditional 401(k), but the bigger hit comes from how that withdrawal lifts taxable income.
Once joint provisional income tops $44,000, up to 85% of Social Security becomes taxable, and a couple receiving $60,000 in benefits could see roughly $51,000 added to ordinary income.
Medicare premiums can jump two years later because 2026 IRMAA surcharges start above $218,000 of joint MAGI, adding about $2,297 a year for a couple in the first tier and much more at higher brackets.
The combined effect of a 22% federal bracket, newly taxable Social Security and IRMAA can push the effective marginal cost of the next dollar withdrawn to about 40 cents.
Retirees can blunt the hit with Qualified Charitable Distributions up to $111,000, careful year-end MAGI management around IRMAA cliffs, and Roth conversions before RMDs begin.