How Much Is Too Much in Retirement?

As a Dallas CERTIFIED FINANCIAL PLANNER™, I’ve sat across the table from countless high achievers—corporate professionals, business owners, diligent savers—who’ve done everything by the book. They’ve maxed out IRAs, contributed to 401(k)s, and stayed laser-focused on retirement savings for decades.

They’ve crossed the seven-figure line with pride, expecting the reward of freedom and peace of mind. But then comes the curveball no one sees coming…

“Melissa, why does it feel like I did everything right—but now I’m being punished?”

The truth? An oversized Traditional IRA can become a tax time bomb.

You’ve spent 30 years deferring taxes—and now the IRS wants its cut. Those Required Minimum Distributions (RMDs), starting at age 73, force you to pull money out whether you need it or not. Suddenly, your tax bracket spikes, your Medicare premiums climb, and your Social Security benefits get taxed. What was once a powerful savings vehicle has become a source of financial friction.

And it doesn’t end with you.

If you don’t spend down that IRA—or plan for it strategically—your heirs inherit not just your wealth, but your tax problem. Thanks to the 10-year rule, your kids may be required to drain the account quickly, possibly in their highest earning years—pushing them into their highest tax bracket and gutting the legacy you hoped to leave behind.

That’s why saving for retirement isn’t just about having “enough.” It’s about having the right kind of money, in the right accounts, at the right time.

Let’s dig into what that means—and how to fix it.

Why a Big Traditional IRA Isn’t Always a Win

Traditional IRAs have long been hailed as a cornerstone of smart retirement planning. And for good reason—tax-deferred growth, the ability to deduct contributions, and compounding interest over decades can help build substantial retirement savings.

But here’s the part they don’t teach you in retirement seminars: the IRS is your silent partner, and eventually, it wants a big piece of the pie.

As a Dallas CERTIFIED FINANCIAL PLANNER™, I work with clients every day who’ve done all the right things—saved diligently, invested wisely, and built impressive nest eggs in their IRAs. Yet they’re stunned when those same accounts become tax bombs in retirement.

Let’s break down why having a large Traditional IRA can backfire:

RMD Shock: Taxes You Can’t Avoid

Once you turn 73 (as of 2025), the IRS requires you to start taking Required Minimum Distributions (RMDs)—whether you need the money or not. These withdrawals are fully taxable as ordinary income, and the larger your IRA, the larger the forced distribution.

Example: A $1.5M Traditional IRA at age 73 could mean a first-year RMD of over $54,000—all of which hits your tax return as taxable income.

If you were hoping to keep your tax bracket low in retirement, RMDs could shatter that plan. And they increase every year as your life expectancy declines, which means your taxes may rise in retirement, not fall.

Hidden Costs: Medicare Premium Surprises

Big IRAs can create a ripple effect across your retirement. RMDs inflate your income, which can push you into IRMAA (Income-Related Monthly Adjustment Amount) territory—triggering higher premiums for Medicare Parts B and D.

Even a small bump in income can result in hundreds of dollars more per month in Medicare costs—an expense that lasts year after year.

Tax Law Risk: Future Hikes Are Inevitable

Our current tax brackets are scheduled to sunset in 2026, meaning higher rates may be on the horizon. If you’re sitting on a large IRA, you’re also sitting on a potential tax liability that grows every year.

Let’s say you’re in the 24% bracket now—but if tax laws shift (or your RMDs grow), you could easily get pushed into the 32% bracket or higher in the years ahead. The bigger the IRA, the more exposure you have to changing tax policy.

Loss of Control in Retirement

Large IRAs limit your flexibility. Every year after age 73, you’re forced to take taxable distributions. You can’t time them around market volatility, personal needs, or charitable giving unless you’ve planned ahead.

Retirement income should be a strategic mix of control and predictability. A massive IRA forces your hand, making it harder to optimize for taxes, healthcare costs, or legacy goals.

What About Your Heirs?

Here’s where the plot thickens: Your IRA doesn’t disappear when you die. But the tax burden doesn’t either.

Since the SECURE Act, most non-spouse beneficiaries must empty inherited IRAs within 10 years—a rule that applies to both Traditional and Roth IRAs. That means if your adult child inherits a $1 million IRA, they might need to withdraw $100,000 or more per year—on top of their own income.

For high-earning heirs, this could mean tens of thousands in unnecessary taxes, pushing them into higher tax brackets or jeopardizing their own retirement savings.

Important Clarification: Inherited Roth IRAs are also subject to the 10-Year Rule—but the distributions are tax-free. So while heirs must drain the account within a decade, they won’t owe income tax on the withdrawals. This is one reason Roth conversions during your lifetime can be a powerful legacy strategy.

 Summary: Big IRA = Big Risk (If You Don’t Plan)

A Traditional IRA can be a fantastic tool—but without proactive planning, it can quickly become:

• A tax trap during retirement
   
• A Medicare premium multiplier
   
• A legacy killer for your heirs
   

This isn’t about punishing success. It’s about recognizing that more money saved doesn’t always equal more money kept. The good news? There are strategic ways to shrink future taxes while you’re still in control—and we’ll cover those in the next section.

The 10-Year Rule: Why a Big IRA Can Hurt Your Heirs

Inherited IRAs aren’t what they used to be.

Before the SECURE Act, beneficiaries could “stretch” inherited IRA distributions over their lifetime—minimizing taxes and keeping the account growing. But today, most non-spouse heirs must drain the account within 10 years of inheritance. Whether they need the money or not.

Here’s why that’s a problem:

• Massive Tax Bills: Large IRA balances mean large forced distributions. If your adult child inherits a $2 million IRA, they could be required to take out $200,000+ annually—on top of their own salary.
   
• Higher Tax Brackets: That extra income can push your heirs into a higher tax bracket, triggering higher rates on their income, capital gains, and even Medicare premiums (if they’re older).
   
• Lost Deductions and Credits: More income may disqualify them from tax deductions, child tax credits, education credits, or ACA subsidies.
   
• Compressed Timeline: Unlike retirees, your heirs may still be working full time, raising families, and already juggling financial responsibilities. The added income creates stress, not relief.
  
   

A “gift” that creates a six-figure annual tax burden isn’t a blessing—it’s a liability.

Even Roth IRAs are subject to the 10-year rule—but at least those withdrawals are tax-free. That’s why Roth conversions during your lifetime can be a powerful strategy: you pre-pay the taxes at today’s lower rates, so your heirs can inherit a tax-free legacy.

What Should You Do Instead? Strategic Income Planning That Works

At Future-Focused Wealth™, we believe retirement success isn’t just about saving—it’s about strategic spending and smart tax planning. If you’ve built a large Traditional IRA, here’s how we help you turn that potential tax liability into a flexible, purpose-driven income plan.

1. Roth Conversions—On Your Terms

We often recommend gradual Roth conversions during early retirement or lower-income years. This turns taxable IRA dollars into tax-free income later.

Why it matters:

• Roth IRAs have no Required Minimum Distributions (RMDs)
• Growth and withdrawals are tax-free
• Roth IRAs are better for legacy planning, especially under the 10-Year Rule
   

In Dallas, with no state income tax, strategic conversions are even more valuable. We “fill the bracket,” converting just enough each year to stay in a favorable federal tax rate.

2. Tax Diversification: Build Income Flexibility

A smart income plan includes a mix of account types:

• Pre-tax (401(k), Traditional IRA)
• Roth (Roth IRA or Roth 401(k))
• Taxable brokerage or savings accounts
   

This mix allows us to withdraw from the right bucket at the right time, giving you control over your tax bill every year—especially critical during Medicare and Social Security coordination.

3. IRA Spend-Down to Fund Life Insurance with LTC Benefits

Here’s a powerful strategy we use for many Dallas retirees:

Instead of letting your IRA grow unchecked—creating massive RMDs later—we can intentionally draw down the IRA early and use those funds to purchase a permanent life insurance policy with a long-term care (LTC) rider.

This helps:

• Reduce future RMDs and tax exposure
• Provide tax-free funds to your heirs (unlike inherited IRAs)
• Cover long-term care expenses—without draining your portfolio
• Create liquidity at death to pay estate taxes or settle debts
   

It’s especially valuable for those who are healthy in their 60s, expect to be in a higher tax bracket later, or want to protect their family from caregiving and tax burdens.

Bonus: The IRS lets you use Qualified Charitable Distributions (QCDs) after 70½ to offset RMDs and support causes you love.

4.  Spend Strategically—Before RMDs Begin

Many people delay tapping their IRAs until RMDs hit—but that can backfire. In some cases, we recommend withdrawing from your IRA earlier, especially if:

• You’re retiring before 70
• You’re delaying Social Security
• You want to “flatten” your lifetime tax bill
   

Spending earlier may sound counterintuitive, but it can reduce long-term tax drag, improve cash flow stability, and preserve more of your wealth over time.

A Note on Timing: Why This Matters Now

If you’re wondering whether to wait and “see what happens,” here’s the reality: the clock is ticking. And smart financial planning doesn’t wait for Congress to decide your tax future.

The 2017 Tax Cuts and Jobs Act (TCJA) is scheduled to sunset at the end of 2025. Unless new legislation is passed, this could mean:

• Higher federal income tax rates for many individuals and couples
   
• Estate tax exemption cuts, potentially exposing more of your legacy to estate taxes
   
• Reduced room for Roth conversions due to compressed tax brackets
   

For high-income earners, retirees with large IRAs, and anyone in the Dallas area planning to leave a legacy—this window is critical.

Now is the time to:

• Strategically convert IRA dollars to Roth at lower rates
   
• Spend down large tax-deferred balances in a tax-smart way
   
• Fund tax-free insurance-based strategies while you’re still insurable
   
• Revisit your estate plan and wealth transfer goals before exemptions shrink

At Future-Focused Wealth™, we’re helping Dallas retirees make proactive moves today—before the tax tide turns.

Don’t wait for the IRS to decide your tax bracket. Let’s create a plan that’s built for today’s laws—and adaptable for tomorrow’s.

Expanded Section: Real Talk—When “Too Much” Means “Too Taxable”

As any good Texan knows, it’s usually in August—in the middle of a heat wave—when your AC unit decides to give up. Financial planning can feel the same way. Everything looks great… until the tax code flips the switch and the system overheats.

Many retirees walk into my office with pride—and rightfully so. They’ve built seven-figure Traditional IRAs, deferred taxes for decades, and believe they’re set. But here’s the wake-up call:

At age 73, the IRS stops waiting.

Required Minimum Distributions (RMDs) kick in, and suddenly, that tidy nest egg becomes a taxable avalanche:

• You’re pushed into a higher tax bracket—whether you need the income or not.
   
• You may lose access to key deductions, credits, or financial aid options (like healthcare subsidies).
   
• Medicare premiums balloon due to IRMAA surcharges.
   
• And worst of all: You lose control over your own income strategy.
   

Even worse? If you pass without a plan, your heirs could be forced to drain that massive IRA in just 10 years—triggering six-figure tax bills in the middle of their own peak earning years.

So yes—you can have too much in the wrong account.

But here's the good news: We can fix it before it becomes a problem.

By planning now—not after RMDs start—we give you the chance to:

• Smooth out your tax burden
   
• Protect your Medicare premiums
   
• Convert taxable assets into tax-free vehicles
   
• Leave a clean, strategic legacy—not a tax mess
   

Let’s not wait until the financial equivalent of a busted AC unit on a 110-degree Dallas day. Let’s get ahead of it—while we still control the thermostat.

Final Thoughts: Big Accounts Deserve Even Bigger Planning

You’ve worked hard. You’ve saved diligently. But building a large Traditional IRA isn’t the finish line—it’s a fork in the road. Without a strategy, your success can quietly become a tax burden, eroding the very security and legacy you intended to protect.

At Future-Focused Wealth™, I work with Dallas-area professionals, retirees, and business owners who are ready for what comes next—not just in life, but in planning.

Together, we create personalized, tax-intelligent strategies that:

• Turn large retirement balances into predictable, efficient income
   
• Minimize tax drag across RMDs, Medicare, and estate transitions
   
• Use tools like Roth conversions, charitable planning, and insurance to give you control
   
• Ensure your wealth passes cleanly and wisely to the next generation
  
  Because the real win isn’t just saving more—it’s spending well, protecting your peace of mind, and building a legacy with intention.

Ready to turn your retirement savings into a smarter income plan?
 Schedule your complimentary consultation today, and let’s make your wealth work harder for you—and easier for your heirs.

FAQs - Oversized Retirement Accounts 

Q: Is it possible to have “too much” in retirement?

Yes—especially when too much is concentrated in a taxable Traditional IRA. Big accounts can trigger bigger RMDs, higher taxes, and Medicare penalties.

Q: What is the 10-year rule for inherited IRAs?

Non-spouse beneficiaries must now empty inherited IRAs within 10 years. This can create massive tax bills for heirs.

Q: Should I convert my IRA to a Roth?

It depends. Roth conversions can reduce future tax liabilities and eliminate RMDs—but timing and tax bracket management are key.

Q: Can I still lower taxes if I’m already retired?

Yes. Through strategic withdrawals, QCDs, and bracket management, we can often reduce long-term taxes after retirement.