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401(k) savers with large balances face rising required minimum taxes
Data from Empower shows about 1,059,396 401(k) accounts had at least $1 million at the end of June 2026, and RMDs are fully taxable as ordinary income.
Yahoo Finance highlights that reaching around $1.5 million in a 401(k) can raise the risk of triggering required minimum distributions, or RMDs, which must be taken during retirement and are fully taxable as ordinary income, according to the IRS.
The outlet notes that RMDs begin after age 73 and the withdrawal amount changes each year based on the IRS Uniform Lifetime Table, using the account balance as of Dec. 31 of the prior year.
Yahoo Finance cites Empower Personal Dashboard data showing the number of 401(k) accounts with balances of at least $1 million was roughly 1,059,396 as of the end of June 2026, emphasizing that larger balances face more complex tax planning.
Using an example, the outlet says an individual with $1.5 million in 401(k) assets on Dec. 31, 2025, would have an estimated 2026 RMD of $56,603.77 at age 73, and $60,975 at age 75, with the IRS requiring withdrawals regardless of whether the saver spends or reinvests the money, and the income is on top of other sources.