Should I reduce my 401k before permanently moving to Germany?
I want to relocate to Germany ideally in the next 12-18 month. I am a dual US/German citizen.
My 401k currently sits at 2.3M. Over the life time ( 20 years), it had an average rate of return of 6%.
Considering Germanys progressive taxation system, I want to keep my income (401k withdrawals or SSA ) at a level that keeps me in the 30%-32% effective tax range.
I realized that this would likely mean that my 401k (given my current investments) is further growing rather then shrinking.
Now what I am most worried about is RMD. Although a bit of a luxury problem, I really don't want to give most of my 401k to Germany's tax authority.
So, I was thinking to do 2 larger withdrawals while still in the US. My thought was to stop working at the end of 2026, then relocate to a state without state income tax and do one large withdrawal in 2027 (400k-500k) and another 400k-500k in 2028 right before moving to Germany. Ultimately I will only end up with 700k as I need to cover the taxes but once I reinvest in my brokerage any future gain realized in Germany would only be taxed at 26%
Would it be foolish to do this?
What else could I do?
Thanks!