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Couple's $480,000 Retirement Plan Faces Hefty Tax Bill at 73

Original: A Couple Who Retires at 63 With $480,000 Between Two 401(k)s and Lives on His Military Pension for Ten Years Can Expect First RMDs of $29,500 at 73, Every Dollar Taxable on Top of the Pension

A retirement scenario making the rounds has a couple retiring at 63 with $480,000 split between two 401(k)s, living for ten years on a military pension. When required minimum distributions kick in at 73, the first withdrawal would be roughly $29,500 — all of it taxable as ordinary income, stacked on top of the pension payments. The example highlights how deferring withdrawals lets 401(k) balances grow while shifting a large tax burden into retirement's later years.

Why now: It illustrates a common but often overlooked retirement-planning pitfall: tax-deferred accounts becoming fully taxable alongside pension income once RMDs begin.

401(k)military pensionrequired minimum distributions

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• A Couple Who Retires at 63 With $480,000 Between Two 401(k)s and Lives on His Military Pension for Ten Years Can Expect First RMDs of $29,500 at 73, Every Dollar Taxable on Top of the Pension · 24/7 Wall St.

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