Gen X 401(k) Savers Face RMD Tax Hit at 75 as Balances Average $217,500
Updated
Updated · 24/7 Wall St. · Jul 9
Gen X 401(k) Savers Face RMD Tax Hit at 75 as Balances Average $217,500
3 articles · Updated · 24/7 Wall St. · Jul 9
Summary
A 61-year-old Gen Xer has about 14 years before required minimum distributions begin at 75, when a large traditional 401(k) withdrawal can sharply raise taxable income even if the cash is not needed.
Traditional 401(k)s defer taxes for decades, unlike pensions, so balances can compound into bigger forced withdrawals; Gen X averages about $217,500 in 401(k)s, while 15-year continuous savers average $589,400.
Up to 85% of Social Security benefits can become taxable once RMDs lift provisional income, and the same income spike can trigger higher Medicare Part B and Part D premiums through IRMAA two years later.
The main planning window is in a retiree's 60s and early 70s, when partial Roth conversions or drawing down traditional balances before claiming Social Security can reduce future RMD pressure.
The article argues Gen X's retirement tax risk reflects the shift from pensions to self-funded accounts, making early sequencing decisions more important than last-minute moves at 74.