A 73 Year Old With $1.6 Million in a Traditional 401(k) Faces a $60,400 First RMD That Quietly Triggers an IRMAA Surcharge

A single retiree turns 73 this year sitting on $1.6 million in a traditional 401(k) and a $3,000 monthly Social Security check. The first required minimum distribution is no longer a future problem. It lands in 2026, and the size of it reshapes everything that follows: the tax bracket, the Medicare premium two years out, and the room left for any Roth conversion still on the table.

The arithmetic is straightforward. The trap, however, sits just one threshold away.

The first RMD, in plain dollars

The IRS Uniform Lifetime Table assigns a distribution period of 26.5 at age 73. Divide the prior year-end balance of $1,600,000 by that figure and the first RMD lands at $60,377, call it $60,400. That entire amount is ordinary income the moment the funds leave the account, stacking directly on top of the Social Security check.

With provisional income this high, 85% of the $36,000 annual Social Security benefit becomes taxable, adding another $30,600 to the pile. Gross income before deductions comes to roughly $91,000. Subtract the 2026 single standard deduction of $16,100 and the $2,050 additional deduction available to single filers aged 65 and older, and taxable income settles near $72,850. That sits squarely inside the 22% bracket, which for single filers spans $50,400 to $107,475 in 2026.

One more layer of recent tax law is worth understanding here. The One Big Beautiful Bill Act, signed on July 4, 2025, created a new $6,000 above-the-line deduction for taxpayers aged 65 and older, available for tax years 2025 through 2028 and claimable whether a filer itemizes or takes the standard deduction. The catch: the deduction phases out at a 6% rate for single filers with MAGI above $75,000 and disappears entirely at $175,000. With MAGI near $91,000, this retiree clears the $75,000 floor by roughly $16,000, which erodes most of the benefit before it can even be claimed. The remaining partial deduction may trim a few hundred dollars from the tax bill, but it does nothing to move the IRMAA needle.

So far, all of this is predictable. The RMD was coming either way, and the first-year tax hit is manageable. The real danger lies two years out.

Where the Medicare trap opens

Medicare IRMAA is calculated on modified adjusted gross income from two years earlier. The 2026 RMD lands on the 2026 return, which then becomes the income base for the 2028 Part B premium. The first IRMAA threshold for a single filer is $109,000 in MAGI. Below that line, the standard Part B premium is $202.90 per month.

A MAGI near $91,000 clears the $109,000 line with about $18,000 of cushion. But a single decision can vaporize that buffer: a $25,000 Roth conversion in the same year, a capital gain from portfolio rebalancing, or simply a larger 401(k) balance the following year as the divisor continues to shrink. Cross $109,000 and the first surcharge tier activates, adding $81.20 per month to Part B and bringing the monthly total to $284.10. A Part D surcharge of $14.50 per month rides alongside. Combined, Tier 1 IRMAA adds roughly $1,148 per year per beneficiary. None of that bill arrives until 2028, which is precisely why most retirees never see it coming.

Two tiers up, at MAGI above $137,000, the Part B premium climbs to $405.80 per month. The 2028 brackets have not been officially set yet, but projections based on inflation trends place the single-filer first-tier threshold near $113,000, meaning even retirees who stay comfortably below $109,000 in 2026 will have a tighter margin to manage in subsequent years. The IRMAA cliff is among the steepest effective tax rates anywhere in the code: a single dollar over any threshold triggers the full surcharge for that tier, for the entire year.

What actually moves the outcome

The 401(k) balance grows with the market, and the RMD divisor falls every year. By age 80 the divisor reaches 20.2, which on a balance in this range pushes the RMD past $80,000 and the MAGI past $109,000 on its own, without any conversions or capital gains required. The clock is running from day one.

One timing detail is worth flagging separately. The IRS permits delaying the very first RMD to April 1 of the year after turning 73, but doing so stacks two full distributions into that following calendar year. The result is typically a larger tax bill and heavier IRMAA exposure than simply taking the first distribution on schedule in the year of turning 73.

Three levers matter most:

1. Qualified charitable distributions. A QCD allows a direct transfer from an IRA to a qualified charity. It counts toward the RMD and is excluded from taxable income entirely, with no need to itemize. The 2026 QCD limit is $111,000 per individual, up from $108,000 in 2025. For a charitably inclined retiree, a $20,000 QCD shaves that same amount off MAGI and creates real distance from the $109,000 IRMAA line. The critical detail: QCDs must originate from an IRA, not a 401(k). A retiree holding assets in a 401(k) needs to roll the account into a traditional IRA before this strategy becomes available.
2. Partial Roth conversions, strictly inside the 22% bracket and with the IRMAA cliff mapped first. A conversion done at 70 or 71, before RMDs begin, is a fundamentally different calculation than one done at 73 when the RMD has already consumed most of the bracket. After age 73, every dollar converted adds to MAGI and can push the Medicare surcharge into effect two years later.
3. Timing of discretionary income. Capital gains, large Roth conversions, and one-off withdrawals belong in years where combined MAGI stays clearly below $109,000. Alternatively, they can be concentrated in years where an IRMAA tier has already been crossed, because at that point the marginal cost of one more dollar inside the same tier is zero.

Action items before December 31

Pull the December 31, 2025 account statement and divide the balance by 26.5 to confirm the exact 2026 RMD. Project full-year MAGI, including the taxable Social Security portion and any planned conversions or capital gain events, then measure the gap to $109,000. If that gap is under $15,000, the immediate priority is rolling the 401(k) into a traditional IRA and routing a portion of the RMD through a QCD before taking any cash personally. The QCD only qualifies if funds leave the IRA as a direct transfer to the charity before any distribution reaches the account holder’s hands. Getting that sequencing right is the difference between keeping the IRMAA buffer intact and losing it for an entire premium year.

Editor’s note: This version corrects the upper bound of the 2026 single-filer 22% tax bracket from $105,700 to $107,475, per IRS Rev. Proc. 2025-32. It also adds context on the projected 2028 IRMAA first-tier threshold (approximately $113,000 for single filers, based on current inflation trends) and notes that the 2026 QCD limit rose to $111,000 from $108,000 in 2025.

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