Retirees with $1.2m 401(k)s face tax hikes and Medicare surcharges at 73
Updated
Updated · 24/7 Wall St. · May 9
Retirees with $1.2m 401(k)s face tax hikes and Medicare surcharges at 73
1 articles · Updated · 24/7 Wall St. · May 9
A single 73-year-old with a projected $1.39m balance and $3,400 monthly Social Security could face a first RMD near $52,000 and $11,000-$13,000 in federal tax.
Because the $34,000 Social Security tax threshold set in 1984 is unindexed, about $34,680 of annual benefits may become taxable, while shrinking RMD divisors can push income above Medicare's $109,000 IRMAA line by ages 75 to 77.
The report says ages 70 to 72 are key for planning, including $40,000-$50,000 annual Roth conversions, qualified charitable distributions after 70½, and avoiding delaying the first RMD into a double-withdrawal year.
Does a new senior tax break create a hidden financial cliff for retirees after 2028?
Is the 401(k) system setting up millions of retirees for an unavoidable tax bombshell?