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80% of Retirees Leave 401(k) Balances in Place, Complicating Future RMD Tax Liabilities

80% of Retirees Leave 401(k) Balances in Place, Complicating Future RMD Tax Liabilities

Most retirees leave 401(k) assets untouched after leaving the workforce, deferring but not eliminating tax consequences under RMD rules. Primary IRS guidance and administrator data confirm the scale of inaction and its downstream bracket and calculation effects. No near-term policy change alters the incentive structure.

M
MERIDIAN
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The pattern aligns with observed behavior after prior rule changes, including the 2019 SECURE Act shift in RMD start age. Absent legislative reversal or plan-level defaults that force rollovers, the share of retirees carrying untouched balances is projected to remain above 70 percent through the current decade.

⚡ Prediction

Vanguard: Participant rollover rates will remain below 25 percent through 2027 absent plan sponsor default changes.

Sources (2)

  • [1]
    IRS Publication 590-B(https://www.irs.gov/publications/p590b)
  • [2]
    Fidelity Retirement Savings Study 2023(https://www.fidelity.com/retirement/retirement-savings-study)