Average 401(k) Balance is $167,970 as of Year-End 2025

Roth conversions during gap years can save retirees on taxes, preventing higher taxes at required minimum distributions (RMDs). The average 401(k) balance for 2025 rose to $167,970, according to Vanguard's How America Saves report. Retirees need to consider the implications of modified adjusted gross income and Medicare surcharges that can arise post-conversion. Lower tax brackets available during gap years can make conversions advantageous, especially for retirees with a balance around this figure. Understanding these conversions is essential for effective retirement planning and tax management.