What to expect when taking 401K distributions in three years.
Hi. My wife and I expect to start taking monthly distributions from our 401K in about 3 years. I’ll be 65 and my wife will be 62. Currently, our 401K is valued at about $2,000,000. We have zero debt. None. The house is paid for as are the cars, kids college debt, etc. Let’s assume that the 401K value is $2,000,000 at Jan. 1, 2026. If we start taking 3% annually ($60,000 yr./$5,000 month), and we are then also drawing Social Security (say, $3800 month combined), how will our taxes be structured? Also, importantly, how are capital gains calculated on the 401K distributions? THANKS!
Terry Says
First, you likely won’t be taking distributions from your 40l(k). You will likely roll it over when you retire.
Second, don’t count on it being worth that much in 3 years– especially if this market gets any worse!
Finally, you are in the perfect moment to work with a financial planner to go through all these issues, including some you forgot, like the costs of healthcare (Medicare supplements, etc) and the potential need for Long Term Care insurance.
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