He’s 61 and Gen X, Retiring Without the Pension.
The 401(k) He Built Is Setting Up an RMD Tax Torpedo at 75
Quick Read – Gen Xers with 401(k)s face RMDs starting at 75, and long-term savers averaging $589,400 risk a forced withdrawal pushing them into a higher tax bracket. – A large RMD counts as ordinary income, making up to 85% of Social Security taxable and triggering IRMAA Medicare surcharges two years later. – Partial Roth conversions and delaying Social Security during the pre-75 window are the two primary tools for shrinking future forced withdrawals. – He is 61, part of the first Gen X wave born around 1965, and the retirement he is walking into looks nothing like his parents’. They had pensions. Steady monthly checks arrived whether the market cooperated or not.
He has a traditional 401(k) with a healthy balance built over decades, exactly as he was told to do when pensions disappeared from private employers in the 1980s and 1990s. That balance is his win. It is also the setup for a tax problem his parents never faced.