At 75, the IRS Controls Withdrawals From a $900,000 401(k). Wealthier Savers Over 60 Are Trying to Drain It Sooner

The IRS can determine how much must come out of a 401(k) at 75, and the resulting tax chain reaction can push an effective marginal rate above 40%. That leaves only a limited window before the clock runs out.

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Consider a 62-year-old who has $900,000 in a traditional 401(k) and is nearing retirement. He would rather not let the IRS decide later how much to withdraw. If he leaves the account untouched, that decision begins at 75.

Many savers are confronting the same issue. On Reddit, one 54-year-old with $720,000 in a 401(k) was told, “You’ll probably do a more substantial amount after 65 once you’re on Medicare.” That timing can be costly.

Age 75 Becomes the Key Deadline for Those Born in 1960 or Later

Under current law, the required minimum distribution, or RMD, starts at 75 for anyone who turns 74 after December 31, 2032. The 62-year-old in this example was born in 1964, so the rule applies to him. If he misses a required withdrawal, he could owe a 25% excise tax, which drops to 10% if corrected in time.

Roth IRAs are treated differently. The original owner never has to take required minimum distributions while alive. Every dollar shifted into a Roth before 75 is a dollar the IRS cannot later force out.

About $91,250 a Year Would Empty the Account

Assuming 5% annual returns and 13 years until age 75, he would need to withdraw about $91,250 at the start of each year to fully drain the account by then.

If nothing is withdrawn, that same $900,000 would grow to roughly $1.7 million by age 75.

The IRS Uniform Lifetime Table divisor at that age is 24.6, which means the first RMD would be about $69,000.

By 85, the divisor falls to 16.0, raising the required withdrawal share of the balance from about 4% to more than 6% a year.

Why a $91,250 Withdrawal Works Out to Roughly 7% Federal Tax Now

Assume he and his spouse file jointly and the withdrawal is the couple’s only taxable income early in retirement. The 2026 standard deduction of $32,200 would leave $59,050 of taxable income.

That income would fall entirely within the 10% and 12% brackets, with the 12% bracket extending to $100,800.

The federal tax bill would be about $6,590, an effective rate near 7%. Any money not needed for living expenses could instead be moved into a Roth IRA through a taxable rollover. Draining the pretax account and spending the money are two separate decisions. Converted money can continue growing, and qualified withdrawals would be tax-free.

The Tax Trap That Waits at 75

Now imagine the account is left alone until 75, with RMDs layered on top of Social Security. On a joint return, benefits begin to become taxable once combined income exceeds $32,000, and the second threshold is $44,000. As much as 85% of benefits can end up taxable.

In that phase-in range, every extra RMD dollar taxed at 22% pulls 85 cents of Social Security benefits into taxable income as well. That creates an effective marginal rate of about 41%.

After one spouse dies, the survivor generally files as single. Under 2026 rules, the first Medicare surcharge threshold drops from $218,000 to $109,000.

Medicare’s Two-Year Lookback Opens a Window at 62

Medicare’s income-related monthly adjustment amount, or IRMAA, generally uses income from two years earlier. A conversion at 62 would usually not affect Medicare premiums at 65. From 63 onward, conversions can influence later premiums. That makes 62 an appealing window, though pre-Medicare health insurance costs still matter.

Under 2026 rules, a $91,250 conversion by itself remains below the joint threshold of $218,000. Add a large capital gain, however, and the couple could move above it.

The first surcharge level adds $81.20 a month per person to the standard $202.90 Part B premium, plus $14.50 for Part D.

Three Steps to Take Before Your Next Birthday

1. Work out your own drain number. Use your balance, a conservative return assumption and the number of years until your RMD age. That reveals the annual amount that must leave the pretax account, and it quickly shows whether the withdrawal fits within the 12% or 22% bracket.
2. Intentionally fill your bracket, and watch Medicare income from age 63 onward. Set each year’s conversion around your tax bracket and that year’s Medicare thresholds, including other income. For 2026, those thresholds are $218,000 for joint filers and $109,000 for single filers.
3. Pay the conversion tax from a taxable brokerage or savings account. That is where your other assets determine whether the strategy works. Paying the tax out of the 401(k) itself leaves less money in the Roth and sharply reduces the benefit.

For a married couple able to convert now at roughly 7% instead of facing a possible 41% marginal rate later, emptying the 401(k) on their own schedule is the better outcome.