A $1.2 Million 401(k) at 73 Triggers an RMD That Can Raise Medicare Premiums Two Years Later
A $1.2 million 401(k) balance at age 73 would require a roughly $45,283 required minimum distribution based on the IRS Uniform Lifetime Table factor of 26.5. Adding that RMD to $190,000 of income could push modified adjusted gross income to about $235,283 and increase Medicare premiums by $2,297 two years later. Rolling the 401(k) into an IRA can allow qualified charitable distributions that satisfy the RMD without raising MAGI.
At 73, the first RMD uses the IRS Uniform Lifetime Table divisor of 26.5. A $1.2 million year-end balance therefore produces about $45,283. That divisor falls to 20.2 by age 80, so required percentages rise with age.
Medicare IRMAA relies on MAGI from two years earlier, including AGI and tax-exempt interest. Here, $190,000 plus the RMD reaches $235,283, above the $218,000 joint threshold. The first tier adds $81.20 for Part B and $14.50 for Part D monthly per person, or roughly $2,296.80 yearly for a couple. Moving the 401(k) to an IRA permits QCDs that count toward the RMD without adding to MAGI.
Retirees with sizable pre-tax retirement accounts and income near Medicare’s IRMAA thresholds could see higher premiums two years after an RMD. Couples may be especially exposed, since a surviving spouse filing single faces lower thresholds. This may prompt more retirees to plan withdrawals and charitable distributions earlier. It could also make Medicare premium planning a larger part of retirement income decisions for affluent households.