Retiring at 65 with $1.6 million in a 401(k) could set you up for a much larger tax bill 10 years later. As the account continues to grow, RMDs may eventually force sizable taxable withdrawals, potentially pushing more of your retirement income into higher tax brackets.
Why Your $1.6 Million 401(k) Could Create a Larger Tax Bill at 75
For someone retiring at 65 today, RMDs generally begin at age 75 under current law. 1 Until then, you have more control over how much you withdraw from a traditional 401(k). Once RMDs start, federal rules determine the minimum amount that must come out each year.
A $1.6 million balance could also become much…
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