A 73 Year Old With $1.5 Million in a 401(k) Discovers RMDs Will Trigger a $280,000 Cumulative Tax Bill

A retiree with about $1.5 million in a traditional 401(k) must begin required minimum distributions at age 73. The first distribution in 2026 is calculated by dividing the account balance by the IRS Uniform Lifetime Table divisor of 26.5, producing about $56,604. Each subsequent year uses a smaller divisor, so withdrawals increase even if the portfolio earns around 6% net of fees. Cumulative distributions from ages 73 to 90 total near $1.4 million, treated as ordinary income. With an estimated blended federal effective rate around 20%, federal taxes could reach roughly $280,000 over the period, before state taxes. As modified adjusted gross income exceeds $109,000 for a single filer, IRMAA increases Medicare Part B and Part D premiums using MAGI from two years prior, with surcharges that can range from about $1,148 to $6,936 per person per year.

"The first required minimum distribution arrives in 2026. Using the IRS Uniform Lifetime Table divisor of 26.5 at age 73, the math is straightforward: $1,500,000 divided by 26.5 lands at $56,604. That number alone is manageable. The 17-year arc that follows is where the bill compounds."

"The Uniform Lifetime Table shrinks each year. Divisors run 25.5 at 74, 24.6 at 75, 23.7 at 76, 22.9 at 77, 22.0 at 78, 21.1 at 79, and 20.2 at 80, and they keep tightening into the 80s. Assuming the portfolio earns 6% net of fees, growth roughly tracks the early withdrawals, which means the RMD base does not shrink fast enough to lower the dollar amount being pulled out."

"Run the schedule from 73 to 90 and cumulative RMDs land near $1.4 million. Every dollar of that is ordinary income. At a blended 22% to 24% marginal federal bracket after the standard deduction and the senior add-on for a single filer, the average effective federal rate works out to roughly 20%. That produces a federal tax bill of about $280,000 over the 17-year window, before any state income tax."

"Once modified adjusted gross income clears $109,000 for a single filer, IRMAA kicks Medicare Part B and Part D premiums into surcharge territory. The 2026 brackets impose surcharges of roughly $1,148 to $6,936 per person per year depending on the tier, and the lookback uses MAGI from two years prior. A $56,604 RMD plus Social Security plus any taxable interest at today's 4.5% 10-year Treasury yield will push most of these retirees past the first threshold in several years across the 17-year"

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