Starting 2026, workers earning over $150,000 must direct all 401(k) catch-up contributions to Roth accounts or risk a corrective distribution and a surprise 1099-R.
Skipping Roth conversions during the pre-RMD window costs $24,000 annually, since converting at 24% saves roughly $24,000 compared to a 40% effective rate at 75.
Stopping large Roth conversions before age 63 prevents the IRMAA two-year lookback from triggering Medicare surcharges of up to $400 or more per person monthly.
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A couple, both 56, has quietly built $3.6 million split roughly evenly across two traditional 401(k) plans. Combined W-2 income sits near $230,000. They are maxing both plans, including catch-up contributions, and treating the balance as untouchable until they retire in their mid-60s. Variations of this exact post appear weekly on Reddit's retirement forums: high six-figure earners in their mid-50s assuming the defer-defer-defer strategy that got them here will carry them the rest of the way.
It will not. At reasonable growth assumptions, $3.6 million becomes roughly $8 to $10 million by the time required minimum distributions begin at 75. The first RMD alone pushes this couple into the 32% federal bracket before Social Security and IRMAA surcharges pile on. The leak they cannot see today is worth about $24,000 a year, every year, for the next two decades.
Two mechanics are draining the account. Both are fixable in 2026.
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Leak 1: Pre-tax catch-ups the law no longer allows. Starting January 1, 2026, workers age 50 or older whose prior-year Social Security wages exceeded $150,000 must route their catch-up contributions to a Roth 401(k), not the traditional side. The standard catch-up is $8,000 on top of the $24,500 base, for a per-person deferral cap of $32,500. If both spouses cleared the wage threshold in 2025 (they did) and their plans still process catch-ups pre-tax, they are looking at a corrective distribution and a surprise 1099-R. If the plan has not enabled Roth catch-ups at all, the $16,000 combined is disallowed outright.
Leak 2: A wasted 24% bracket runway. For 2026, the 24% federal bracket for married couples filing jointly ends at $211,400, and 32% kicks in above that. This couple has almost no room left in 24% while both are working. The window opens the year wages stop. Between retirement (call it age 62) and the first RMD at 75, they own a 13-year corridor to convert traditional dollars to Roth at a blended 22% to 24% rate. Ignore that runway and the same dollars come out later at 32% federal, plus IRMAA Medicare premium surcharges of $70 to $400+ per person per month, plus taxation of up to 85% of Social Security benefits. The effective marginal rate lands near 40%.
The arithmetic on the leak: $150,000 converted at 24% costs $36,000 in tax today. The same $150,000 forced out at 75 under a 40% effective rate costs $60,000. Gap: $24,000 per year, for every year the runway sits idle.
Two rate signals matter here. The fed funds rate at 3.75% and the 10-year Treasury near 4.6% mean bond sleeves inside 401(k) plans are compounding faster than they did during the zero-rate decade. A larger pre-tax balance at 75 means a larger forced distribution, which means a larger tax cascade. Meanwhile, the 2026 standard deduction of $32,200 for joint filers is the largest it has ever been, giving conversion planners more room under the 12% and 22% brackets than they had two years ago. This window is favorable and time-limited.
Switch 2026 catch-ups to the Roth 401(k) immediately. Call the plan administrator this week and confirm Roth catch-up is enabled. If it is, redirect the $8,000 per spouse catch-up now so payroll averages out over the remaining pay periods. If the plan does not support Roth catch-ups, the contribution is disallowed and both spouses should escalate with HR before year-end.
Draft a Roth conversion ladder that starts the year wages stop. Target filling taxable income to the top of the 24% bracket ($211,400) each year from retirement through age 63. After 63, every additional dollar of conversion income can trigger a Medicare Part B and Part D surcharge two years later under the IRMAA lookback. That single date, birthday 63, is the hard deadline on the biggest conversion years.
Line up Qualified Charitable Distributions for the RMD years. Any charitable giving after age 70½ should route directly from the IRA, offsetting RMDs dollar-for-dollar without touching adjusted gross income. A couple giving $20,000 a year to their church or alma mater keeps that $20,000 out of the IRMAA and Social Security taxation calculations entirely.
The path to $3.6 million is the easy part. The next 19 years is where the real tax planning happens, and the biggest single year of savings is the one that starts before the paycheck stops.
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