How the IRS Quietly Forces You to Empty Your 401(k)
(And Why the Percentage You Withdraw Keeps Growing Every Year)
If you’re saving in a 401(k), Traditional IRA, or similar tax-deferred plan, it’s easy to feel like you’re doing everything right.
You get the tax break now. You defer taxes while your money grows.
And one day, you’ll pull out what you need and live comfortably in retirement.
But there’s one thing most savers don’t realize:
The IRS isn’t going to wait forever to collect the taxes you’ve deferred.
And starting at age 73, they’re going to force you to begin withdrawing—and taxing—your money.
It’s called the Required Minimum Distribution (RMD).
And the percentage you’re required to withdraw?
It increases every year for the rest of your life.
Let’s Look at the IRS’s Withdrawal Schedule
Below is a simplified version of the IRS Uniform Lifetime Table.
It shows the percentage of your qualified account the IRS requires you to withdraw each year—whether you need the money or not:
| Age | IRS Withdrawal % |
|---|---|
| 73 | 3.77% |
| 74 | 3.92% |
| 75 | 4.07% |
| 76 | 4.22% |
| 77 | 4.37% |
| 78 | 4.55% |
| 79 | 4.74% |
| 80 | 4.95% |
| 81 | 5.15% |
| 82 | 5.41% |
| 83 | 5.65% |
| 84 | 5.95% |
| 85 | 6.25% |
| 86 | 6.58% |
| 87 | 6.94% |
| 88 | 7.30% |
| 89 | 7.75% |
| 90 | 8.20% |
| 91 | 8.70% |
| 92 | 9.26% |
| 93 | 9.90% |
| 94 | 10.53% |
| 95 | 11.24% |
| 96 | 11.90% |
| 97 | 12.82% |
| 98 | 13.70% |
| 99 | 14.71% |
| 100+ | 15.63% and up |
Why This Is a Problem
The IRS doesn’t care whether the market is up or down.
They don’t care if you’re trying to make your money last.
They want to tax your retirement accounts now, and they want to tax more each year as you age.
Here’s what this means for you:
✅ You lose control over your income
You must withdraw at least the required amount—even if you don’t need it.
💰 Your taxable income grows year by year
Each withdrawal adds to your income and may:
- Push you into a higher tax bracket
- Cause your Social Security to become taxable
- Trigger higher Medicare premiums (IRMAA)
📉 Your account drains faster
At a 4%–6% withdrawal rate, you’re already pushing the limits of what most experts consider “safe.”
At 10%–15% withdrawals in your 90s?
You’re now reversing compounding, not benefiting from it.
What If the Market Drops?
Let’s say you’re 80 years old, and your account is worth $400,000.
The IRS requires you to withdraw $19,800 that year (4.95%).
But what if the market dropped 15% the year before?
Now you’re selling at a loss, just to satisfy the IRS.
So What’s the Alternative?
Many retirees are now using tax-smart strategies to avoid or reduce RMDs, including:
- Roth conversions: Pay tax now at today’s rates; avoid RMDs forever
- Indexed Universal Life (IUL): Tax-free access to cash and tax-free legacy; no RMDs
- Non-qualified annuities: Grow money without RMDs; provide guaranteed lifetime income
- Qualified Charitable Distributions (QCDs): Donate from IRA after age 70½ to reduce RMD liability
Bottom Line
If all your retirement money is in a qualified plan, you’re on the IRS’s withdrawal schedule—not your own.
They’ll tell you how much to take, when to take it, and how much tax they’re going to collect.
But you have a choice.
You can build parallel income streams that give you control over:
- When to take income
- How much tax you pay
- How long your money lasts
Want to See What Your Future Withdrawal Schedule Looks Like?
Let me show you a side-by-side comparison of:
- The IRS’s withdrawal plan
- Your tax exposure over time
- And how a more efficient strategy can protect your income
[Schedule My Free RMD Strategy Call]