At 73, His 401(k) Will End the Year at $1.2 Million. The Balance Will Set a $45,000 Required Withdrawal, and That RMD Will Set His Medicare Premium Two Years After He Takes It
A $1.2 million 401(k) forces a withdrawal at 73, but the financial hit that blindsides most retirees arrives two years later on a completely different bill, and by then it is too late to do anything about it.
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Take a married man who turns 73 in 2027. His 401(k) will close 2026 near $1.2 million. His first required minimum distribution (RMD) divides that December 31 balance by his IRS Uniform Lifetime Table factor of 26.5 at age 73, producing $45,283. He must take it whether he needs the cash or not. The divisor shrinks every year, from 26.5 at age 73 to 20.2 at age 80, pushing the required withdrawal percentage higher as he ages.
In a June 2026 episode of the Clark Howard Podcast, a listener with a $1.5 million 401(k) said: “If I don’t do anything, RMD is going to be very painful.” The second cost of an RMD comes two years later, on a Medicare premium notice.
A Withdrawal Taken in 2027 Shows Up on the 2029 Medicare Bill
Medicare sets IRMAA surcharges from modified adjusted gross income (MAGI): adjusted gross income (AGI) from Form 1040 line 11, plus tax-exempt interest from line 2a. Tax-exempt interest still counts here, catching municipal bond investors off guard. SSA generally uses the tax return from two years earlier, so 2026 premiums are based on 2024 tax return information. His 2027 RMD will set his 2029 premium.
Only about 8% of Part B enrollees pay IRMAA. A couple with joint MAGI well under $218,000 avoids it. Our retiree is closer to the line. Social Security, a pension and dividends put the couple at an estimated $190,000 of MAGI before the RMD. Add the withdrawal and joint MAGI reaches $235,283, which is $17,283 over the threshold.
What One Dollar Over the Line Costs
IRMAA works as a cliff. Going one dollar over a bracket triggers that tier’s full surcharge.
| 2026 joint MAGI | Part B total premium (per person, monthly) | Part D surcharge (per person, monthly) |
|---|---|---|
| $218,000 or less | $202.90 | $0.00 |
| Over $218,000 up to $274,000 | $284.10 | $14.50 |
| Over $274,000 up to $342,000 | $405.80 | $37.50 |
In the first tier, each spouse pays an $81.20 Part B surcharge plus $14.50 Part D surcharge, totaling $1,148.40 per person annually or $2,296.80 for the household, before income tax on the RMD itself. Brackets rise with inflation (the joint threshold went from $194,000 in 2023 to $218,000 in 2026), but his RMD also rises yearly as the divisor shrinks.
The bigger risk comes if one spouse dies. The survivor files single, and the single threshold starts at $109,000, half the joint figure. The same RMD, added to one pension and the taxable portion of the larger Social Security check, can push the survivor several tiers higher.
Form SSA-44 won’t help here. SSA cuts IRMAA only after a qualifying life-changing event that lowered income, such as marriage, divorce, the death of a spouse, stopping or reducing work, loss of pension income, or an employer settlement payment.
Three Moves to Make Before the Withdrawal Is Required
- Roll the 401(k) into an IRA before December 31, 2026, then use qualified charitable distributions (QCDs). QCDs can only come from an IRA, and you must be at least 70½ on the day of the distribution, which he is. A QCD can count toward the RMD but stays out of AGI. If the couple already gives to charity, sending at least $17,283 of the 2027 RMD straight to charity keeps joint MAGI at today’s $218,000 line. That’s a conservative target, because the 2029 brackets will be adjusted for inflation. The 2026 QCD limit is $111,000 per person.
- Take the first RMD during 2027. Rules allow the first RMD to wait until April 1 of the year following, but waiting puts two RMDs in 2028. That could push 2030 premiums past $274,000 into the second tier.
- If you’re still in your 60s, project your RMD now. Divide your expected balance for the year-end before your first RMD year by the Uniform Lifetime Table factor for your starting age. That’s 26.5 if you start at 73, and those born in 1960 or later start at 75. Then add the taxable portion of your Social Security, pension income and dividends. If the total lands within $20,000 of an IRMAA bracket, the years between retirement and your first RMD are the cheapest time for partial Roth conversions that shrink the balance. Each conversion also counts in MAGI two years later, so have an advisor who models IRMAA and charges only fees decide how much to convert each year.
The RMD amount is set by formula. What you can still change is how much of it shows up in MAGI, as long as you plan before the withdrawal is due. This is one of several IRS rules that quietly drain six figures from retirement accounts over a lifetime, and we mapped out the rest in a free guide to defusing the first-year tax bomb.
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Gerelyn Terzo is the author of dividend investing handbook "Dividend Investing Strategies: How to Have Your Cake & Eat It Too." A veteran financial journalist, she covers agri-finance for outlets like Global AgInvesting and the broader stock market and personal finance for 24/7 Wall Street. She began at CNBC and later helped launch Fox Business in New York. Gerelyn currently resides in Woodland Park, Colorado and dabbles in nature photography as a hobby.
