Got $10M Saved? Here Are the Huge RMDs the IRS Makes You Take
If you have a traditional 401(k) or IRA, required minimum distributions (RMDs) are a part of life. Starting at age 73, these mandatory annual withdrawals are how the IRS finally gets paid. The exact amount you must withdraw each year depends on your account balance, age, and life expectancy.
You may think RMDs are manageable and are just a necessary part of having a 401(k) or IRA. But they can negatively impact your taxes, Medicare premiums, and Social Security benefits, especially if you have a lot saved in those tax-advantaged accounts.
That’s why it’s important to know how much your annual RMDs will be — especially if your 401(k) or IRA balance tops $10 million.
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Why it pays to know how much your RMDs are
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There are many reasons why savers with $10 million or more in their traditional 401(k)s and IRAs should know exactly how much their RMDs are each year. After all, with $10 million, the withdrawals will be large, which creates all sorts of problems, including:
- Higher taxes: Because withdrawals are treated as ordinary income, your RMDs could push you into a higher income bracket.
- Medicare premium surcharge: If your RMD pushes your income over a certain level, you are charged an extra Income-Related Monthly Adjustment Amount (IRMAA).
- Social Security taxes: Your RMDs will easily push you over the IRS income threshold, triggering the full 85% tax on your Social Security benefits.
How much are your RMDs on $10 million?
The exact amount you should withdraw annually from $10 million saved depends on your age and life expectancy factor.
Your life expectancy factor is obtained from the IRS’s Uniform Life Table and takes into account actuarial data that re-estimates your remaining lifespan with every birthday you celebrate. The older you get, the lower your life expectancy is, and the more you face in RMDs.
The formula is the following:
Account Balance/Life Expectancy Factor = RMD
Here’s how much your RMDs will be with $10 million if you are 73, 75, 80 or 85. Click here to see withdrawals if you have $1 million or $5 million saved.
|
Age |
Life Expectancy Factor |
RMD |
|
73 |
26.5 |
$377,359 |
|
75 |
24.6 |
$406,504 |
|
80 |
20.2 |
$495,050 |
|
85 |
16 |
$625,000 |
How to lower the RMD impact
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With $10 million, your annual withdrawals are likely to have massive tax implications and trigger the maximum Medicare IRMAA surcharge, but the good news is you can minimize the impact.
Some common strategies for wealthy individuals include:
- Spread out withdrawals. Use low-tax years in retirement to take penalty-free distributions between when you stop working and age 73 to smooth out your taxable income and gradually reduce your pre-tax balance. Do that instead of waiting to be forced to take RMDs later.
- Engage in Roth conversions before RMD age. With a Roth IRA or 401(k), you don’t have to take RMDs. By converting a portion of your traditional 401(k) or IRA money into a Roth in the years leading up to age 73, you can lower your future mandatory distributions. To prevent a taxable event, withdraw up to the top of your income bracket.
- Make charitable qualified distributions. If you are charitably inclined and over the age of 70 ½, you can transfer up to $111,000 for 2026 from a traditional IRA to a qualified 501(c)(3) charity. These qualified charitable distributions satisfy your RMDs.
Don’t wait for age 73
RMDs are a fact of life when you have a traditional 401(k) or IRA. But when you have $10 million or more in your retirement account, it can be a serious tax shock. Knowing how much the withdrawals will be each year and planning for how to minimize them will go a long way in preserving your wealth and preventing avoidable tax hits.
Editor’s note: This article is part of a series that looks at RMDs by age and retirement balance. The other stories are: Got $1M Saved for Retirement? Here Are the Huge RMDs You Must Take at 73, 75, 80 and 85, Got $2.5M Saved for Retirement? Here Are the Huge RMDs You Must Take at 73, 75, 80 and 85, and Got $5M Saved for Retirement? Here Are the Huge RMDs the IRS Makes You Take at Ages 73, 75, 80 and 85.
