A $1.8 Million 401(k) and Social Security Coming Up? Drain It Before 70 to Dodge the IRMAA Cliff

A 64-year-old couple with $1.8 million in traditional 401(k)s walks into a planning meeting convinced they should claim Social Security at full retirement age and let the portfolio compound. The advisor pushes back: claim later, drain the 401(k) first. The math behind that counterintuitive sequence is what high earners are quietly using to outrun a Medicare premium structure that punishes anyone who waits too long.

The trap is pure timing. Required minimum distributions on a $2 million-plus pre-tax balance, stacked on top of two Social Security checks at full retirement age, push modified adjusted gross income well past $218,000 for joint filers. That is the first IRMAA cliff. Cross it, and Medicare Part B jumps from $202.90 per person per month to $284.10, and a Part D surcharge of $14.50 per person lands on top of that. For a couple, crossing the threshold by even one dollar adds roughly $2,300 a year in Medicare costs.

Why the Pre-Social Security Window Is the Whole Game

The strategy exploits the gap between an early retirement date and a Social Security claim at 70, using that window to draw down the 401(k) at controlled tax rates. For 2026, the married filing jointly brackets enter the 22% range above $100,800 in taxable income and the 24% range above $211,400. The standard deduction is $32,200. A couple can therefore pull roughly $185,800 from a traditional 401(k), report MAGI of about $218,000, and park right at the edge of the first IRMAA tier without leaving the 24% bracket.

One important planning wrinkle: the One Big Beautiful Bill Act created a new $6,000 senior deduction for taxpayers 65 and older, though it phases out for joint filers with MAGI above $150,000. Couples executing an aggressive drawdown campaign will almost always sit above that threshold, so the deduction rarely moves the IRMAA math at the income levels this strategy targets. That said, planners should model it year by year, because lower-distribution years can bring the deduction back into range.

Sustain that withdrawal campaign from age 64 to 70, and the pre-tax balance shrinks by more than $1 million in gross withdrawals. The future RMD, which uses the IRS Uniform Lifetime Table starting at 73, falls in proportion. A $2.5 million balance left untouched produces a first-year RMD near $94,000. A $1.4 million balance produces one closer to $53,000. That $41,000 difference in annual income is exactly what keeps the couple under the IRMAA line a decade later, when Social Security and RMDs land on the same return at the same time.

The Delayed Claim Pays for the Tax Bill

Delaying Social Security from full retirement age at 67 to age 70 raises the benefit by 8% a year, a 24% total lift before COLAs apply. Factor in the 2.8% 2026 COLA and the indexing that follows, and a couple expecting $4,000 a month each at 67 lands closer to $5,200 a month each at 70 in inflation-adjusted dollars. That larger base benefit also becomes the survivor benefit, so the sequence is really purchasing a larger, joint-and-survivor annuity at a discount by spending pre-tax dollars during the gap.

The cost of getting it wrong is concrete. A couple whose RMDs and Social Security combine to push MAGI past $274,000 faces a total Part B premium of $405.80 per person, which translates to roughly $4,870 a year in additional Part B costs for the household above the standard premium. Adding the Tier 2 Part D surcharge of $37.50 per person pushes the total annual burden close to $5,770 for the couple. Push MAGI past $342,000 and Part B climbs to $527.50 per person. Because IRMAA uses a two-year lookback, the surcharge showing up at age 73 reflects income reported at 71. Planning must begin before the bill arrives.

What This Looks Like in Practice

Three steps separate this from generic drawdown advice:

1. Map MAGI to the $218,000 first-tier threshold for every year between Medicare enrollment at 65 and age 73. Include taxable brokerage income, because capital gains and dividends count toward IRMAA just as ordinary income does.
2. Size each 401(k) withdrawal to fill the 24% bracket without crossing the IRMAA line, then run a parallel projection that adds Roth conversions for any remaining headroom. A conversion done at 65 reduces the future RMD denominator the same way a direct withdrawal does, without forcing cash outside tax-advantaged shelter.
3. Lock the Social Security claim at 70 unless health or longevity assumptions change materially. The 24% delayed retirement credit, applied to the larger of the two benefits, becomes the survivor’s monthly check for the rest of their life.

Couples who run this sequence are acting on a structural advantage that is unlikely to shrink. The 2026 Social Security Trustees Report, released in June 2026, confirmed the program’s total cost in 2025 was roughly $1.609 trillion, with benefits flowing to 70 million people. The same report moved up the projected depletion date for the OASI retirement trust fund to 2032, one year earlier than the 2025 report had estimated, a reminder that the program faces real long-run pressure even as annual payments remain fully funded today. Social Security benefits are indexed to inflation each year, while the IRMAA brackets adjust on a separate and generally slower inflation measure. Spending down the 401(k) first converts the most punitively taxed dollars into the cheapest ones, and it does so during the precise window when no Social Security income is competing for the same MAGI space.

Editor’s note: This pass added context from the 2026 Social Security Trustees Report, including the revised OASI trust fund depletion date of 2032 (one year earlier than the prior projection), and verified all IRMAA premium figures, 2026 tax bracket thresholds, and the 2.8% 2026 Social Security COLA against official sources.

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