401(k) Balances Above $700,000 Can Raise Social Security Tax Bills

A traditional 401(k) balance above $700,000 can generate a required minimum distribution (RMD) large enough to make up to 85 percent of a retiree's Social Security benefit taxable, 24/7 Wall St. reported.

The outlet's warning centers on the first RMD a saver takes, which the Internal Revenue Service mandates once an account holder reaches the age at which withdrawals from tax-deferred retirement accounts must begin. Because that withdrawal counts as ordinary taxable income, 24/7 Wall St. reported it can be large enough, on a $700,000-plus balance, to push a retiree's total income past the point where the maximum share of Social Security benefits already allowed under federal law becomes taxable.

What Threshold Did 24/7 Wall St. Flag?

The report identifies $700,000 in a traditional 401(k) as the balance at which the first RMD risks this outcome. The outlet did not publish the exact dollar size of the resulting RMD in the portion of the report reviewed, and HTT News could not independently verify the calculation behind that specific figure.

How Do RMDs Interact With Social Security Taxation?

Under existing federal tax law, a portion of Social Security benefits becomes taxable once a retiree's other income crosses set thresholds, with 85 percent standing as the maximum share that can be subject to federal income tax. An RMD adds directly to that other income in the year it is withdrawn. 24/7 Wall St.'s reporting frames the first RMD as the moment this interaction becomes concrete for retirees who have not previously drawn from the account.

Why Does the First RMD Carry the Most Risk?

The first RMD often represents a sharp, one-time jump in taxable income for a retiree who, in prior years, lived mainly on Social Security or smaller withdrawals. 24/7 Wall St.'s warning suggests that jump — rather than the ongoing RMDs that follow — is the point at which a retiree is most likely to be surprised by the share of Social Security benefits now appearing on a tax return.

What Remains Unverified?

HTT News was not able to review the full 24/7 Wall St. article, including any worked examples, specific income thresholds, or the RMD age cited. The $700,000 balance figure and the 85 percent ceiling are reported here as 24/7 Wall St.'s stated findings, not as independently confirmed calculations. Readers with large traditional 401(k) balances approaching RMD age should consult a tax professional or the IRS's own guidance before relying on either figure for planning purposes.

What Options Do Savers Have?

24/7 Wall St.'s reporting points toward the account structure itself, including traditional versus Roth holdings, as a factor retirees can review before their first RMD arrives. The underlying mechanics — how combined income determines the taxable share of Social Security — are set by existing federal tax law rather than by the size of any single account, meaning the $700,000 figure functions as an illustrative marker in the report rather than a fixed legal cutoff.

For the full report, including any additional detail not captured here, see 24/7 Wall St.'s original story.