A $1.5 Million 401(k) at 73 Can Defer $200,000 in RMDs Past Age 85. Here’s How.

A 73-year-old couple sitting on a $1.5 million traditional 401(k) is about to take their first required minimum distribution. They do not need the cash. They need the optionality. The check is going to land on top of Social Security, push them through the first IRMAA bracket at $218,000 of joint MAGI, and create a Medicare surcharge that follows them for two years. The qualified longevity annuity contract is the one IRS-blessed tool that lets them carve a chunk of the balance out of the RMD calculation entirely, all the way out to age 85.

The scenario is not theoretical. On a recent episode of Suze Orman’s podcast, a couple named Janelle and Patrick, both 65, called in asking whether converting traditional IRA dollars into a QLAC made sense as a way to defer RMDs and manage IRMAA brackets when they turn 73. That is the right question at the right age, and the math has gotten more attractive in 2026.

What the 2026 limit actually buys you

SECURE 2.0 killed the old 25%-of-balance cap and replaced it with a flat dollar limit indexed for inflation. For 2026, the IRS holds the QLAC premium limit at $210,000 per person, which means a married couple can move $420,000 combined out of their RMD base. Every dollar moved into a QLAC stops counting toward the year-end balance the IRS uses to compute required distributions.

Run the numbers on our 73-year-old. The Uniform Lifetime Table divisor at 73 is 26.5. A $1.5 million balance produces a first-year RMD of about $56,600. Shift $210,000 into a QLAC, and the RMD base drops to $1.29 million. The new RMD is roughly $48,700, a reduction of about $7,900 in the first year alone. Repeat that arithmetic every year through age 84, and the cumulative deferred distributions easily clear $200,000, all of it still compounding inside the wrapper instead of getting forced onto a 1040.

The IRMAA trap this actually defuses

The bigger story is the tax cascade you avoid. Add a $56,600 RMD to a couple drawing $60,000 in Social Security and a $40,000 pension, and joint provisional income blows past the $218,000 first IRMAA threshold for 2026. That trips a Part B surcharge on top of the $202.90 standard 2026 premium, plus a Part D surcharge, for both spouses, for two full years thanks to the lookback. A couple in the 22% federal bracket who simultaneously trigger 85% Social Security taxation and the first IRMAA tier are looking at an effective marginal rate near 40 cents on the dollar.

Trim the RMD by $7,900 and the same household stays under the threshold. The QLAC did not just defer income. It rescued two years of Medicare premiums from a surcharge that has nothing to do with current-year planning.

Why the rate backdrop matters right now

QLAC payouts are priced off long-duration Treasuries. The 10-year yield sits at 4.49%, sitting in the 94th percentile of its historical range. The Fed funds upper bound is 3.75%, unchanged for more than six months after 75 basis points of cuts between late September and early December 2025. Insurers have not yet repriced longevity contracts to reflect lower short rates, which keeps deferred income quotes generous for buyers locking in today.

One caveat: QLAC payments are fixed in nominal dollars. CPI has run from 325.3 in January to 335.1 in May 2026, and the 2026 Social Security COLA came in at 2.8%. A $210,000 QLAC bought today buys a smaller real income stream at 85 than the quote suggests. Treat it as longevity insurance rather than an inflation hedge.

What to do this quarter

1. Pull last year’s tax return and project this year’s MAGI with the full RMD included. If joint MAGI crosses $218,000 (or $109,000 single), the IRMAA surcharge alone often justifies the QLAC carve-out.
2. Request three QLAC quotes with income starting at 85, not 80 or 82. The longest deferral produces the largest monthly payment and the maximum RMD reduction in the meantime. Compare A.M. Best ratings before chasing the highest payout.
3. Coordinate the purchase with a partial Roth conversion in the same tax year. The $7,900 RMD reduction creates room to convert an equivalent amount at the same marginal rate, shrinking the future RMD base twice in one move.

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