Craig Wear, CFP®Craig Wear, CFP® | Expert in Roth Conversions & Tax-Efficient Retirement Strategies for IRA Millionaires

How Traditional IRAs Cost You MORE in Taxes

15 May 2026 · 1 min

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In this segment, CFP® Craig Wear explains that a traditional IRA that grows to a multi‑million‑dollar balance can generate extremely large required minimum distributions (RMDs) once withdrawals begin. Using a $2 million starting balance that grows to about $3.2 million, the annual RMD can exceed $120,000, adding six‑figure taxable income each year. This forced income stacks on top of other retirement sources—Social Security, pensions, capital gains—pushing the retiree into higher tax brackets and triggering Medicare income‑related surcharges. Wear warns that the cascade of higher taxes, Medicare penalties, and the impact on a surviving spouse or heirs can create a lifetime tax problem, potentially costing IRA millionaires more than $1 million in taxes if not managed properly.

Chapters

Well, if someone has $2 million in an IRA and it grows to around $3.2 million by the time RMDs begin, the required withdrawal can easily be over $120,000 a year. That is 6 figures of taxable income that's being forced out of one account every single year. And that's on top of all the other taxable income like Social Security, pensions, capital gains, and that'll bump up your Medicare surcharges as well. It doesn't just create large forced withdrawals, it triggers a chain reaction of lifetime tax problems that affect your retirement, the surviving spouse, and even your children or other heirs if it's not handled properly. So that's how this trap can cost IRA millionaires over $1 million in lifetime taxes.