Retirees With Over $1.5 Million in a Traditional 401(k) Are Being Warned About This $43,000 Annual RMD at 73

The math hits different once you read it on an IRS worksheet. A 73-year-old with $1.5 million in a traditional 401(k) divides that balance by the 26.5 factor in the IRS Uniform Lifetime Table and ends up with a first-year required minimum distribution of $56,604. That is taxable income landing on top of Social Security, pension payments, dividends, and interest, and it grows almost every year for the rest of the retiree’s life.

This conversation is showing up across Bogleheads threads and r/retirement: people born between 1951 and 1959 who maxed out pretax contributions for 30 years now realize the bill they deferred is due.

Why the RMD Curve Keeps Bending Upward

The Uniform Lifetime divisor shrinks every year, so the percentage withdrawn rises even when the balance is flat. By age 80, the divisor falls to 20.2. A portfolio that has grown to roughly $1.6 million by then produces a required withdrawal near $79,208. Across a typical 10 to 15 year RMD horizon on a $1.5 million starting balance, the average annual distribution lands between $43,000 and $60,000, depending on portfolio returns.

Run that through the 22% federal bracket and you are looking at roughly $113,520 in federal income tax on the RMDs alone over a dozen years. State income tax stacks on top before the cascade starts.

The IRMAA Surcharge No One Sees Coming

For 2026, a single filer with modified adjusted gross income above $109,000 (or a couple above $218,000) crosses the first IRMAA tier. The standard Part B premium is $203 a month, but Tier 1 adds about $1,148 per person per year in combined Part B and Part D surcharges. Medicare uses a two-year lookback, so a $56,000 RMD at 73 plus Social Security can trigger higher premiums at 75.

Pair IRMAA with Social Security taxation (up to 85% of benefits become taxable above the combined-income thresholds) and the effective marginal rate on the next dollar withdrawn often approaches 40%. That is the tax bomb in plain English.

The Window That Closes at 73

The lever that changes the outcome is timing income. Between retirement and age 73, most readers sit in a low-income window where the 22% bracket for joint filers extends to $206,700 of taxable income in 2026. Converting traditional 401(k) dollars to Roth up to the top of that bracket each year, a strategy called bracket smoothing, shrinks the future RMD base permanently.

The current environment makes the math easier to defend. Core PCE is running at the 90th percentile of its trailing 12 months and the federal funds upper bound sits at 3.75% after three cuts. Tax brackets are inflation-adjusted, but the IRMAA thresholds barely move and Social Security COLAs keep pushing benefits higher, with payments rising to $1,631.2 billion by the first quarter of 2026. Future RMDs will be taxed at brackets we have not yet seen.

Three Levers Worth Pulling Before 73

1. Convert annually to the top of the 22% bracket. A couple with $90,000 of other taxable income can convert roughly $116,000 a year and stay inside 22%. Done across five low-income years in the mid-60s, that is more than half a million dollars pulled from the future RMD base, often at a lower rate than the blended rate those dollars would face after 73.
2. Use QCDs once you turn 70.5. The 2026 limit is $111,000 per person sent directly from an IRA to qualified charities. A QCD counts toward the RMD but never hits adjusted gross income, sidestepping both Social Security taxation and the IRMAA lookback. For charitably inclined retirees, this is the cleanest RMD offset in the code.
3. Build a taxable bridge account and consider state residency. Funding a brokerage account during the conversion years gives you a tax-flexible spending source so RMDs are not forced into consumption. Pairing that with a move from a high-tax state to a no-income-tax state before 73 can save the equivalent of an entire IRMAA tier each year.

Pull up IRS Publication 590-B, run your projected balance through the Uniform Lifetime Table for ages 73, 80, and 85, then layer in expected Social Security. If the result puts you over $109,000 single or $218,000 joint, the conversion conversation is no longer optional. It is the difference between paying tax on your terms and paying tax on the Treasury’s schedule.