Retirement tax and income planning
Managing Medicare IRMAA Costs in Retirement
A Roth conversion, capital gain or retirement-account withdrawal can affect more than income taxes. It may also increase Medicare Part B and Part D costs two years later. Thoughtful planning can help you understand that tradeoff before a transaction is complete.
Educational information only—not individualized tax or Medicare advice. Medicare premiums, tax rules and income thresholds change.
Begin with the full cost
What is the best way to manage Medicare IRMAA?
Project modified adjusted gross income before completing large retirement transactions, identify the Medicare premium tier that may apply two years later, and compare the potential surcharge with the transaction’s broader tax and financial benefit.
The goal is not always to avoid IRMAA. A Roth conversion that creates a temporary premium increase could still improve a household’s projected long-term outcome. Conversely, realizing a small amount of additional income near a threshold could create an avoidable premium increase. The right analysis measures both the immediate Medicare effect and the longer-term plan.
The short answer
IRMAA planning works best as part of a multi-year retirement-income and tax plan. Estimate income early, monitor the applicable threshold, leave room for unexpected income and recheck the projection before year-end transactions.
Understand the adjustment
What is Medicare IRMAA?
IRMAA stands for income-related monthly adjustment amount. It is an additional amount that higher-income Medicare beneficiaries pay for Part B medical coverage and Part D prescription-drug coverage. It is separate from a Part D plan’s own premium.
Social Security generally determines IRMAA using the most recent federal tax return supplied by the IRS. For 2026 premiums, that is generally the 2024 return. If both spouses are enrolled in Medicare, each spouse can be assessed an adjustment even though the income threshold comes from their joint return.
Moving above a threshold can place the beneficiary in the next premium tier. The additional premium is not calculated only on the dollars above the threshold, which makes year-end income estimates especially important.
Current reference
2026 Medicare IRMAA brackets and premiums
The following table applies to 2026 premiums for people filing an individual return and married couples filing jointly. The income shown is generally 2024 modified adjusted gross income. Part D amounts are added to the premium charged by the person’s prescription-drug plan.
| Individual MAGI | Married filing jointly MAGI | Total monthly Part B premium | Monthly Part D adjustment |
|---|---|---|---|
| $109,000 or less | $218,000 or less | $202.90 | $0 plus plan premium |
| Above $109,000–$137,000 | Above $218,000–$274,000 | $284.10 | $14.50 plus plan premium |
| Above $137,000–$171,000 | Above $274,000–$342,000 | $405.80 | $37.50 plus plan premium |
| Above $171,000–$205,000 | Above $342,000–$410,000 | $527.50 | $60.40 plus plan premium |
| Above $205,000–below $500,000 | Above $410,000–below $750,000 | $649.20 | $83.30 plus plan premium |
| $500,000 or more | $750,000 or more | $689.90 | $91.00 plus plan premium |
Source: Centers for Medicare & Medicaid Services and Social Security Administration, 2026 figures. Married-filing-separately rules differ. Verify the applicable filing-status table and current-year amounts before acting.
For a married couple with both spouses enrolled, the potential household effect may be twice the per-person Part B and Part D adjustment shown. A careful comparison should annualize the cost and account for both spouses.
Know the threshold before the transaction.
Test planned conversions, gains and withdrawals before they become part of the tax return Medicare may later review.
Use Medicare’s definition
What income counts toward IRMAA?
For IRMAA purposes, modified adjusted gross income is generally adjusted gross income from the federal return plus tax-exempt interest. This definition surprises some investors because municipal-bond interest can be exempt from federal income tax and still count when Social Security determines Medicare premiums.
Roth conversions
The taxable portion of a Roth conversion generally increases adjusted gross income and may move the beneficiary into a higher IRMAA tier.
IRA distributions
Taxable withdrawals and required minimum distributions generally increase adjusted gross income.
Capital gains
Realized gains from selling investments, a business or property may raise the income used for IRMAA.
Pensions and earnings
Taxable pension income, wages, self-employment income and other taxable income flow into the calculation through adjusted gross income.
Social Security
The taxable portion of Social Security benefits is included in adjusted gross income and can interact with other retirement income.
Tax-exempt interest
Tax-exempt interest is added back to adjusted gross income specifically for the Medicare IRMAA calculation.
Income shown on a brokerage statement is not the same as IRMAA MAGI. The calculation should start with a projected federal return and should be reviewed with a qualified tax professional.
Build a repeatable process
How to plan retirement income around IRMAA
Project the correct tax year
Connect the current year’s income decision to the Medicare premium year it may affect. The usual two-year gap makes it easy to overlook the consequence.
Build a baseline income estimate
Include pensions, wages, Social Security, interest, dividends, required distributions, planned withdrawals and expected realized gains.
Model optional transactions
Add potential Roth conversions, portfolio rebalancing, property sales and other discretionary income one scenario at a time.
Calculate the household premium effect
Use the correct filing status, count each spouse who is enrolled and compare the full annual Part B and Part D cost.
Leave a reasonable margin
Dividends, fund distributions and late tax documents can move final income. Planning directly to the last dollar below a threshold leaves little room for error.
Compare—not just avoid
Evaluate whether paying a higher premium temporarily supports a larger objective, such as reducing future RMD exposure or completing a valuable gain or conversion.
This process fits naturally within a broader retirement income plan. Medicare costs, taxes and portfolio decisions should not be analyzed as separate problems.
IRMAA is one variable—not the entire plan.
Avoiding a surcharge is not a win if it causes a larger long-term tax or investment problem. Compare the complete outcome.
Consider the available levers
Strategies that may help manage future IRMAA
Use earlier planning years
When appropriate, realizing gains or completing Roth conversions before the two-year lookback for Medicare eligibility may reduce later conflicts between tax planning and premium thresholds.
Choose income sources deliberately
Coordinate taxable accounts, traditional retirement accounts, Roth assets and cash rather than automatically drawing from the same account every year.
Manage realized gains and losses
Evaluate gain realization, tax-loss harvesting and rebalancing together. Investment decisions should still reflect risk, diversification and the overall plan.
Review qualified charitable distributions
For an eligible IRA owner age 70½ or older, a properly completed QCD is generally excluded from income and can count toward an RMD. Specific eligibility and reporting rules apply.
Test conversions over several years
A series of partial conversions may provide more control than a single large conversion, but every year should be tested against taxes, IRMAA and other thresholds.
Update before December 31
Replace estimates with actual income information when possible, then revisit discretionary transactions while there is still time to adjust.
It can be rational to cross an IRMAA tier when a transaction produces a greater projected benefit. The analysis should quantify the extra premium rather than treating IRMAA as an outcome that must always be avoided.
Coordinate two planning questions
How do Roth conversions affect Medicare IRMAA?
The taxable portion of a Roth conversion generally increases adjusted gross income. A conversion completed in 2026 may therefore affect Medicare premiums in 2028 under the usual lookback process. That does not automatically make the conversion a mistake.
A conversion may reduce future traditional-account balances and required minimum distributions, create tax-free withdrawal flexibility under current rules, or improve a surviving spouse’s projected tax position. The decision should compare the conversion tax and any later IRMAA with those potential benefits.
Read Fairchild Capital’s guides to Roth conversion planning and Roth conversions before RMDs for the broader framework.
When old income no longer reflects reality
Can you appeal or request a lower IRMAA?
Social Security permits a beneficiary to request a new determination when a recognized life-changing event significantly reduces modified adjusted gross income. Qualifying events include marriage, divorce or annulment, death of a spouse, work stoppage, work reduction, loss of income-producing property because of circumstances beyond the person’s control, loss of employer pension income and certain employer settlement payments.
Form SSA-44 is used to request a lower IRMAA after a qualifying event. Supporting documentation and an estimate or tax return for the more recent income year may be required. A corrected or amended tax return can also justify updating information when the IRS data used by Social Security was wrong or later changed.
Social Security specifically identifies items such as a voluntary property sale, capital gain, IRA conversion, lottery winnings or cashing bonds as non-qualifying events by themselves. Do not assume a large one-time transaction can be removed through the life-changing-event process.
If the income information is accurate and no qualifying event applies, a beneficiary may still have appeal rights but should not expect the request to succeed merely because the income was unusual. Follow the instructions in the determination notice or consult Social Security directly.
Received an unexpected IRMAA notice?
Start by confirming the tax year, MAGI, filing status and whether a recognized life-changing event changed the household’s income.
A coordinated retirement view
How Fairchild Capital approaches IRMAA planning
Fairchild Capital helps people approaching or living in retirement coordinate income, investments and tax-sensitive financial decisions. That can include modeling how withdrawals, gains, Roth conversions and required distributions may affect projected Medicare premiums alongside the rest of the retirement plan.
The purpose is to make the tradeoff visible before a decision is made. Fairchild does not prepare tax returns, provide legal advice or sell Medicare insurance. When implementation requires tax or Medicare-specific guidance, the planning process should be coordinated with the client’s tax professional, Social Security, Medicare or an appropriately licensed insurance professional.
IRMAA analysis is most useful when connected to a retirement withdrawal strategy and an ongoing retirement plan, not performed as a once-a-year calculation in isolation.
Common questions
Medicare IRMAA FAQs
What does IRMAA stand for?
IRMAA stands for income-related monthly adjustment amount. It is an additional amount that some higher-income Medicare beneficiaries pay for Part B and Part D coverage.
How is Medicare IRMAA calculated?
Social Security uses filing status and modified adjusted gross income from the most recent federal tax return supplied by the IRS, generally from two years before the Medicare premium year, and applies the corresponding annual premium tier.
What income counts toward IRMAA?
For IRMAA, modified adjusted gross income is generally federal adjusted gross income plus tax-exempt interest. Taxable retirement distributions, Roth conversions, realized gains, wages, pension income and the taxable portion of Social Security can therefore affect the calculation.
Does municipal-bond interest count toward IRMAA?
Yes. Tax-exempt interest is generally added to adjusted gross income when Social Security calculates modified adjusted gross income for IRMAA.
Can a Roth conversion increase Medicare premiums?
Yes. The taxable portion of a Roth conversion generally increases adjusted gross income and can place a beneficiary in a higher IRMAA tier for a later Medicare premium year.
Do capital gains affect Medicare IRMAA?
Realized taxable capital gains generally increase adjusted gross income and may affect IRMAA. An unrealized gain does not enter income merely because the investment increased in value.
Can a qualified charitable distribution help with IRMAA?
A properly completed qualified charitable distribution is generally excluded from income and may satisfy part or all of an eligible IRA owner’s RMD. It may therefore produce a different IRMAA result than taking a taxable distribution and separately donating cash. Eligibility and reporting rules apply.
Is IRMAA permanent?
No. Social Security redetermines IRMAA for each premium year using the tax information and rules applicable to that determination. A person can move into or out of an IRMAA tier as income changes.
Can I appeal an IRMAA determination?
You may request a new determination after a recognized life-changing event that significantly reduced income, correct inaccurate tax information or appeal a decision you believe is wrong. Form SSA-44 is used for qualifying life-changing events.
How far ahead should I plan for IRMAA?
Begin before Medicare eligibility and maintain a rolling multi-year projection during retirement. Because the determination generally uses tax information from two years earlier, waiting until the premium notice arrives may be too late to change the transaction that caused it.
Official references
Sources and further reading
Government resources
CMS: 2026 Medicare Parts A and B Premiums and Deductibles
Social Security: Rules for Higher-Income Medicare Beneficiaries
Social Security: Request to Lower IRMAA
Social Security: IRMAA Modified Adjusted Gross Income
Social Security: Recognized Life-Changing Events
IRS Publication 590-B: IRA Distributions and QCDs
Plan beyond this year’s tax bill
Coordinate Medicare costs with your retirement income plan.
Fairchild Capital helps people age 50 and older evaluate the financial decisions that shape retirement income, taxes and long-term flexibility.
