A 72-Year-Old With $1.3 Million in a 401(k) Has One Year Left to Shrink a $52,000 RMD Before It Starts
One December 31 deadline separates this retiree from a smaller first RMD, lower Medicare premiums, and a tax rate they actually control. The window is open now, but three moves have to happen before it closes.
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A 72-year-old with $1.3 million in a traditional 401(k) has until December 31 to reduce the first required minimum distribution.
Under SECURE 2.0, RMDs start at age 73 for anyone born between 1951 and 1959.
This reader turns 73 in 2027, and that first RMD is calculated from the account balance on December 31, 2026.
Every Dollar Out Before December 31 Shrinks the First RMD
The IRS Uniform Lifetime Table uses a divisor of 26.5 at age 73. A $52,000 first RMD means a year-end balance near $1.38 million.
If the balance stays at $1.3 million, the first RMD is about $49,000.
Money that leaves the 401(k) this year comes off that base. Moving $100,000 into a Roth by December 31, 2026 cuts the first RMD by roughly $3,800.
That takes $52,000 down to about $48,000. The savings repeat every year after that. This is because the converted dollars grow in a Roth, which has no RMDs for the original owner.
Three moves work in 2026. These are an in-plan Roth conversion, a rollover to an IRA and conversion, or a voluntary withdrawal. A rollover also enables qualified charitable distributions (QCDs), which can only come from IRAs.
The window closes January 1. In an RMD year, the required amount must come out first and cannot be converted.
April 1 Grace Period Stacks Two RMDs Into One Year
You can wait to take the first RMD until April 1 of the year after turning 73. For this reader, that’s April 1, 2028. The second RMD is still due by December 31 of that same year.
Waiting puts two distributions on one tax return. If the balance holds near $1.38 million, the age 74 RMD is about $54,000. Roughly $106,000 of 401(k) income shows up on a joint return in 2028 before Social Security, pensions, or dividends.
That spike affects Medicare premiums two years later. For 2026, joint filers with modified adjusted gross income above $218,000 pay $284 a month for Part B, up from $203.
The first surcharge tier costs about $1,950 a year, and 2028 income sets 2030 premiums.
Pay 22% on Your Terms or More on the IRS’s
For 2026, the 22% bracket for joint filers covers taxable income from $100,800 to $211,400.
Income above that is taxed at 24%. A couple with room in the 22% bracket pays $22,000 on a $100,000 conversion and chooses the amount.
If you wait, the IRS chooses for you, and since the divisor drops yearly, each RMD takes a bigger share as you age. Forced income makes more Social Security taxable and drives MAGI toward IRMAA tiers. For a retiree in the 22% bracket, the effective marginal rate approaches 40%.
When one spouse dies, the survivor files as single starting the following year. For single filers, the 24% bracket starts at $105,700 and IRMAA kicks in at $109,000, while RMDs on the combined account grow.
Our view: convert now. Fill the 22% bracket this year, keep 2026 MAGI under $218,000, and count every converted dollar as a permanent cut to future RMDs. The quiet stretch between retiring and the first RMD may be the lowest tax rate this reader ever sees again, which is the whole case we made in a free guide to the Roth conversion window.
Three Moves to Make Before December 31
- Project your December 31 balance by mid-November. Divide it by 26.5 to estimate your first RMD, then size a conversion that keeps 2026 taxable income under $211,400 if filing jointly. A conversion only counts for 2026 if finished by December 31.
- Take your first RMD in 2027. Drives it to April 1, 2028 combines two years of income into one and raises 2030 Medicare premiums.
- If you give to charity, roll the 401(k) into an IRA before year end. QCDs starting at age 70½ can count toward your RMD without adding to taxable income.
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Jake has been been working in financial media for almost 15 years. He focuses on all things personal finance for 24/7 Wall St. with high hopes to educate and entertain. Most recently, Jake spent 12 years working various roles at The Motley Fool. He started copy editing fool.com content, worked on premium and marketing campaigns, and helped launch The Ascent, a personal finance brand.
His work has been featured on platforms like MSN, Yahoo Finance, USA Today, and more. He's written about credit cards, social security, ETFs, savings accounts, and just about anything else you can imagine when thinking about money. Jake love to cook, play golf, and tell people he's never had a cavity. (It's true!)
