- A traditional 401(k) or IRA that grows very large forces Required Minimum Distributions starting at 73, at 1/26.5 (about 3.77%) of the balance, rising every year after, taxed as ordinary income whether the money is needed or not.
- That forced income can cascade: it can trip the Medicare IRMAA surcharge (about $2,297 a year for a couple crossing the first 2026 threshold), the 3.8% Net Investment Income Tax, and the loss of the 2025-2028 senior tax deduction, all in the same tax year.
- The fix isn't to stop saving in a 401(k). It's to stop saving only in a traditional one, splitting future contributions across Roth, taxable brokerage, and (where available) mega backdoor Roth accounts before the balance gets large enough to force the issue.
Diane and Mark are both 73 this year, and by any conventional measure they did retirement planning right. Two careers, steady 401(k) contributions, an employer match neither of them left on the table, and a combined traditional IRA and 401(k) balance of $2.8 million. Then the IRS Uniform Lifetime Table caught up with them. This year it requires them to withdraw about $105,700, whether they want the income or not, whether the market cooperated or not, and whether they had anywhere useful to put it or not.
(Diane and Mark are a composite. The math is real and typical for a couple in their income and asset range.)
The forced part is the problem, not the size
Being called out for saving too much sounds like a strange complaint. The complaint isn't the balance. It's what a large balance forces once Required Minimum Distributions start.
At 73, the IRS Uniform Lifetime Table sets the first RMD factor at 26.5. Divide the prior year-end balance by that number and the result is required income, taxed at ordinary rates, for that tax year. On Diane and Mark's $2.8 million, that's $2,800,000 / 26.5, about $105,700. The factor drops in later years, to 25.5 at 74, 24.6 at 75, and further from there, which means the required percentage of the balance rises every year the owner ages. A $105,700 forced withdrawal this year can become a larger share of the account next year even if the balance hasn't grown.
The Wall Street Journal wrote about this pattern in August 2026, and the reason it's common has less to do with bad planning than with timing. A lot of long-career savers had no access to Roth 401(k)s for much of their working life, and traditional contributions came with an immediate deduction and, often, a company match. CPA Ed Slott, who specializes in retirement tax planning, put it plainly in that piece: advisers see clients whose "traditional IRAs are disproportionately large" constantly, because for years that was simply the default, better-than-nothing way to save.
Where the forced income goes
A $105,700 RMD doesn't just get taxed once at a flat rate. It stacks on top of whatever else Diane and Mark already have coming in, Social Security, a pension, portfolio income, and it can push their total income across lines they didn't know they were near.
Say their other income already put them at $160,000 of modified adjusted gross income. Add the RMD, and they're at $265,700. Three things can now happen in the same tax year:
Medicare IRMAA. The 2026 surcharge starts at $218,000 of MAGI for a married couple, based on income from two years earlier. At $265,700, Diane and Mark cross into the first tier, adding about $2,297 a year in combined Part B and Part D premiums between them. It's a cliff, not a ramp: land one dollar over the line and the full surcharge applies for the year.
The 3.8% Net Investment Income Tax. NIIT applies to the lesser of net investment income or the amount MAGI exceeds $250,000 for a married couple. At $265,700, that's $15,700 over the threshold, roughly $600 more in tax if their investment income covers it.
The senior deduction. The 2025-2028 bonus deduction for taxpayers 65 and older is worth up to $12,000 for a couple, but it phases out between $150,000 and $250,000 of MAGI for joint filers. At $265,700, it's gone entirely, on top of everything else.
None of these show up as a single line item that says "RMD penalty." They show up scattered across a Medicare premium notice, a tax return, and a deduction that quietly isn't there anymore, which is exactly why the pattern catches careful savers off guard.
Three ways to not be Diane and Mark
Keep the traditional deduction, if the math still favors it. If your expected retirement tax rate is genuinely lower than your current rate, contributing to a traditional 401(k) up to the match and beyond can still be the right call. The 2026 employee deferral limit is $24,500. The trap isn't traditional saving itself. It's saving exclusively that way for decades.
Add Roth, but size it to your actual bracket. Roth contributions use after-tax dollars, so the benefit only shows up if your tax rate on the contribution is lower than your expected rate on a traditional withdrawal. For someone in peak earning years, that comparison often doesn't favor a large Roth push today. It favors starting now with new contributions and, later, executing a deliberate multi-year Roth conversion in lower-income years, sized to stay under IRMAA and bracket thresholds rather than converting a lump sum all at once.
Use a taxable brokerage account, and a mega backdoor Roth if your plan allows one. A taxable account has no contribution limit and no forced withdrawals, and long-term capital gains get preferential rates instead of ordinary-income treatment. Some employer plans also allow after-tax 401(k) contributions on top of the regular $24,500 limit, up to a combined $72,000 ceiling for 2026, that can be converted to Roth through a mega backdoor Roth strategy, a meaningfully larger version of the same idea.
Run your own numbers before the IRS runs them for you
Diane and Mark's mistake wasn't saving in a 401(k). It was never checking what a large traditional balance would eventually force. Three SwitchWize tools model exactly this: the RMD Planner shows the actual required withdrawal and IRMAA headroom for your balance and age, the Medicare IRMAA Planner and NIIT Calculator show what forced income costs beyond the tax bracket itself, and the new Traditional vs. Roth vs. Taxable Brokerage Calculator puts all three account types side by side, including an adjustment for exactly the bracket creep described above. If your plan supports after-tax contributions, the Mega Backdoor Roth 401(k) Calculator sizes that opportunity too.
Diane and Mark are a composite couple used to illustrate typical math; their ages and balance are hypothetical. The 2026 RMD factors, IRMAA thresholds and premiums, NIIT thresholds, and senior-deduction phase-out figures cited are real as of August 2026. This article is educational and is not tax, retirement, or investment advice; a large traditional balance interacts with your full tax return, and thresholds change annually.
Related reading: why IRMAA works as a cliff, not a ramp, the mega backdoor Roth 2026 guide, and the Roth conversion window.
Connect the lesson
Turn the article into a next step.
SwitchWize takeaway
Find your number, not the market's.
Run a Money Map to see how your cash, debt, and rates stack up against the best available options.
Start Money Map →2026 figures from the IRS Uniform Lifetime Table (RMD factors), CMS (IRMAA thresholds and premiums), and OBBBA senior-deduction phase-out rules, cross-checked against SwitchWize's RMD Planner, Medicare IRMAA Planner, and NIIT Calculator. Reviewed August 23, 2026.