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Large 401(k) balances can trigger sizable taxable RMDs
For example, a $1.5 million balance as of Dec. 31, 2025 can produce an RMD of $56,603.77 for age 73 in 2026, according to an SEC calculator example.
A Yahoo Finance analysis highlights how people with large 401(k) balances may face significant tax bills once required minimum distributions, or RMDs, begin in retirement. An RMD is the minimum amount an individual must withdraw each year, and it is fully taxable as ordinary income, the outlet notes.
The story points to IRS rules that require withdrawals starting at age 73, with the exact RMD amount determined annually using the IRS Uniform Lifetime Table. It also says the calculation depends on the account balance on Dec. 31 of the prior year and the account holder’s age.
As an illustration, the article cites an example from an SEC online calculator showing that a $1.5 million 401(k) balance on Dec. 31, 2025 would lead to an RMD for 2026 of $56,603.77 if the person was exactly 73 that day. For comparison, it says that if the person were 75 at that time, the RMD would be $60,975.
Yahoo Finance also cites Empower Personal Dashboard data that, as of the end of June 2026, there were about 1,059,396 401(k) accounts with balances of at least $1 million, underscoring how many savers may need more complex tax planning around RMDs.