Fidelity Says the Average 401(k) Balance Hit $155,800. As Much as $34,000 of That Belongs to the IRS, and the Bill Grows Every Year It Sits Untouched

Fidelity says the average 401(k) balance hit $155,800. If that number is yours, congratulations. Also: you owe a chunk of it to the IRS, and you have never been billed.

That is the quiet feature of a traditional 401(k). Every dollar in the account is pre-tax. Every dollar of gain is pre-tax. The tax gets paid on the way out, at whatever rate applies then, on whatever the balance has grown to by then. The bigger the balance, the bigger the deferred bill in absolute dollars.

What the Fidelity Number Actually Measures

Fidelity’s quarterly retirement analysis tracks tens of millions of accounts. The most recent report in this data set, Q4 2025, put the average 401(k) balance at $146,400, up 11% from Q4 2024, drawn from 26,200 corporate defined contribution plans and 24.8 million participants as of December 31, 2025. The $155,800 figure reflects the more recent 2026 update to that same series. It is a snapshot skewed upward by long-tenured savers: five-year continuous savers averaged $304,200 at the end of 2025.

The salient point for taxes is that this is a gross number. It is what your statement shows. It is not what you get to spend.

Where the $34,000 Comes From

Imagine a married couple who eventually withdraws that $155,800 balance and has no other taxable income that year. Under the 2025 married-filing-jointly brackets, the first $23,850 is taxed at 10%, income from $23,851 to $96,950 at 12%, and income from $96,951 to $206,700 at 22%. Stack the balance through those fill lines and the federal tab lands in the low-$20,000s before state income tax.

Now assume the more realistic case: the withdrawal sits on top of Social Security, a pension, or a spouse’s wages. More of the account gets taxed at 22% or 24%. A blended federal-plus-state hit approaching $34,000 on a $155,800 balance is a middle case for a household in a taxed state.

And this is the trick of deferral. If the balance doubles by the time you touch it, so does the embedded tax in dollar terms. The rate might be similar. The check is twice as big.

Why RMDs Force the Question

You can defer, but not forever. Required minimum distributions begin at age 73 for most current retirees and age 75 for younger cohorts. The IRS uses the Uniform Lifetime Table divisor against your prior-year-end balance. The first RMD can be delayed to April 1 of the following year, which sounds generous and often is not: it doubles up two taxable withdrawals in one calendar year, which can trip the next federal bracket and, two years later, an IRMAA tier that reprices Medicare Part B and Part D premiums for the whole year.

Untouched pre-tax accounts also throw a widow’s-penalty problem. When one spouse dies, the survivor moves to single brackets while often keeping most of the household income. The same RMD, taxed as a single filer, hits a higher rate.

Levers You Actually Control

Nothing here says pre-tax was a mistake. The deduction on the way in was real, and for most workers the arithmetic still favored the traditional 401(k). What you control now is the shape of the eventual bill.

• The Roth conversion window. The years between retirement and the start of RMDs are often the lowest-bracket years of a saver’s life. Converting slices of the traditional balance to Roth, filling the 12% or 22% bracket on purpose, moves future growth into a bucket the IRS cannot tax again.
• Withdrawal sequencing. Which account you tap first, taxable brokerage, traditional, or Roth, changes lifetime tax by five and six figures for larger balances. The textbook order (taxable, then traditional, then Roth) is a starting point, not gospel; bracket-filling changes the answer.
• Qualified charitable distributions. After 70½, sending RMD dollars directly from an IRA to charity satisfies the RMD without adding to adjusted gross income, which also protects IRMAA and the taxability of Social Security.

The overall US personal saving rate was 2.8% in the second quarter of 2026, so a six-figure 401(k) is genuinely hard-won. Deciding how the IRS gets paid out of it is the kind of math worth running with a CPA or fiduciary advisor before the first RMD, not after (we sized up the low-bracket years between your last paycheck and your first RMD in a free Roth conversion guide here: The Roth Window).

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