Having a large portion of your retirement wealth in a tax-deferred 401(k) presents potential drawbacks, including significant tax burdens when making withdrawals.
The most notable downside of having a large portion of your retirement wealth in a tax-deferred 401(k) is the tax liability when you start withdrawing the money.
If you have a significant amount saved, such as $2 million, your required withdrawals could push you into a higher tax bracket.
Once you reach age 73, you're required to take Required Minimum Distributions from your 401(k) if you're no longer working, whether you need the money or not.
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