A $1 Million 401(k) Can Force $37,736 Out at 73 and $49,505 at 80. The Tax Bill Comes After

At 73, a retiree with $1 million in a pretax 401(k) is about to discover that the same account balance gets harder to leave untouched as he gets older. His first required minimum distribution (RMD) comes to about $37,736. If that $1 million balance never changed, the required withdrawal would still keep climbing.

Age is what drives the difference. Compare the same $1 million account at 73, 75 and 80, and the IRS formula forces progressively more money out even though the balance never moves.

Same Balance, Three Ages, Three Bigger Withdrawals

Each age gets a distribution period from the IRS Uniform Lifetime Table. Think of it as a divisor that gets smaller every birthday. Divide the same balance by a smaller number and the required withdrawal goes up.

These figures hold the balance constant so the ages can be compared directly. They do not forecast what one portfolio will do. A real account moves with market returns and shrinks with every withdrawal. If the account grows faster than you draw it down, the required amount at 80 could be larger than the table shows.

Your first required year depends on when you were born. Under IRS Notice 2026-13, people who turn 72 after December 31, 2022, and 73 before January 1, 2033, start at 73.

People who turn 74 after December 31, 2032, start at 75. For that younger group, the age-75 row is the first year’s withdrawal.

Your Required Withdrawal Lands on Top of Every Other Dollar

Because this 401(k) was funded entirely with pretax dollars, its required distribution is generally taxable in the year he receives it. The withdrawal lands on the same return as pension income, part-time wages, interest, dividends and capital gains.

Social Security is where this hurts most. The taxable part of your benefit depends on the benefit plus your other income, and up to 85% of benefits can become taxable once that combined figure passes IRS thresholds. A larger required withdrawal can push more of your Social Security into taxable income.

Medicare is the second effect. Higher-income retirees pay income-related surcharges on Part B and Part D premiums, and those surcharges are generally based on modified adjusted gross income (MAGI) from two years earlier. A large withdrawal can raise your premiums long after the money has been spent.

Your filing status, deductions and the rest of your income decide what the withdrawal actually costs. Two retirees with the same roughly $49,505 RMD can owe very different amounts of tax.

Delaying the First Withdrawal Can Stack Two Into One Year

You can delay your first required distribution to April 1 of the year after you reach your starting age. The second one is still due by December 31 of that same year, so both withdrawals can land in one tax year.

Someone starting at 73 who waits until the following spring would report that first withdrawal plus the next year’s required amount on a single return. Waiting can still make sense. If income in the starting year is unusually high, maybe from a final paycheck or a large asset sale, moving the first withdrawal into a quieter year may be the better choice. Compare both years before you decide.

Skipping a required amount is expensive. Missing an RMD can trigger a 25% excise tax on the shortfall, although that can fall to 10% if the mistake is corrected within the allowed period.

Build Your Withdrawal Calendar Before the Statement Arrives

1. Use the actual year-end balance. Each year’s requirement is based on the prior December 31 value. Employer plans generally have to be figured separately, so get the figure for every 401(k) you own instead of relying on a rough total.
2. Map every income source for your starting year and the year after. Line up pension, Social Security, wages and expected investment income. That shows you whether to take the first withdrawal on time or delay it to April 1.
3. Spread withdrawals through the year if that helps cash flow. Plans can pay the minimum in installments, such as monthly or quarterly. Withdrawing extra in one year earns no credit toward later requirements, so taking more early is a calculated tax choice and won’t reduce future minimums.

Retirees who handle this well decide in their late 60s or early 70s which tax years will report the extra income. The fix usually starts years before the first required withdrawal, which is the whole subject of our free guide to defusing the first-year tax bomb.

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