A 73-year-old sitting on $1.6 million inside a traditional 401(k) is about to cross a threshold most retirees never see coming. The first required minimum distribution arrives, and a second, invisible bill starts building two years later inside Medicare.
The RMD math itself is not complicated. Using the IRS Uniform Lifetime Table, the divisor at age 73 is 26.5, which turns a $1.6 million balance into a first-year distribution of roughly $60,400. That figure is not optional, it counts as ordinary income the day it leaves the plan, and it resets higher every year the account keeps growing.
Where the Tax Bomb Actually Detonates
The $60,400 is only the visible cost. Stack it on top of a typical Social Security benefit and any pension or dividend income, and modified adjusted gross income for a single filer easily clears the first IRMAA threshold of $109,000, or $218,000 for a couple filing jointly.
Once MAGI crosses that line, 2026 Medicare Part B premiums step up from the standard $202.90 per month to $284.10, and Part D layers another $14.50 per month on top of the plan premium. For a single retiree in that first surcharge tier, the combined damage is close to $1,150 a year. Push MAGI past $137,000 and Part B jumps again to $405.80 per month, which is roughly $2,435 per year in Part B surcharges alone.
The trap is the two-year lookback. The 2026 RMD sets the IRMAA bracket that shows up on 2028 Medicare premiums. By the time the surcharge notice arrives, the income that triggered it is two years old and cannot be unwound.
Why the First RMD Hits Harder Than the Next One
For someone whose RMD age was pushed to 73 under SECURE 2.0, the first distribution can be deferred until April 1 of the following year. That option sounds generous until you realize it stacks two RMDs into a single tax year, doubling the income spike and often bumping the retiree into a higher IRMAA tier and a higher federal bracket simultaneously. Taking the first RMD in the year you turn 73 is almost always the cheaper path.
Inflation is quietly making this worse. The Consumer Price Index sits at 332.6 in June 2026, up from 322.2 a year earlier, and the 2026 Social Security COLA came in at 2.8%. Larger benefit checks are welcome, and they also lift MAGI toward the IRMAA cliffs.
What Actually Softens the Blow
Qualified Charitable Distributions are the cleanest offset available to a 73-year-old. A QCD sent directly from an IRA satisfies the RMD dollar for dollar and never appears in AGI. For a retiree who already gives to charity, routing $10,000 or $20,000 of the $60,400 through a QCD can be the difference between clearing the $109,000 line and staying comfortably beneath it. QCDs are not permitted from a 401(k), so a direct rollover to an IRA before year-end is the prerequisite.
Where the after-tax proceeds land also matters. The national average 12-month CD yields 1.7%, while the 10-year Treasury is paying 4.7%. On a fully reinvested $60,400 RMD, that spread is worth roughly $1,800 more in annual interest, and Treasury interest escapes state income tax.
Three Moves Before December 31
- Run the RMD yourself. Take your December 31, 2025 balance, divide by 26.5, and treat that as a floor. If the account has grown in 2026, next year’s RMD will be higher again on a smaller divisor.
- Model the IRMAA cliff before withdrawing. Add the RMD to expected Social Security (up to 85% taxable), pension, and investment income. If the total lands within $5,000 of $109,000 single or $218,000 joint, a QCD or a modest Roth conversion earlier in the year is worth the effort to stay under.
- Roll a slice to an IRA now. QCDs, more flexible beneficiary options, and easier Roth conversions all live on the IRA side. Complete the plan’s RMD first, then move the rest.
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