IRMAA Medicare Premium Surcharges for Retirees with Large IRAs and Brokerage Accounts: How to Keep Them Predictable

You can do everything “right” in retirement and still get hit with what feels like a stealth raise.

You sell a chunk of appreciated stock to fund a remodel. Or you start required minimum distributions (RMDs). Or you do a smart Roth conversion to reduce future taxes. Then, two years later, Medicare tells you your Part B and Part D premiums are going up. Not because Medicare changed your coverage. Because your income, from two tax years ago, crossed a line you didn’t even know existed.

This is IRMAA. And for higher-income retirees with large IRAs and taxable brokerage accounts, IRMAA isn’t rare. It’s predictable. The real problem is that most households only see it after the fact, when the premium increase shows up and there’s nothing left to “fix” for that year.

In this essay I’m going to make IRMAA plain-English simple, then show you the three levers that matter most: withdrawal sequencing, capital gains timing, and Roth conversion sizing. My goal is not to promise you’ll never pay IRMAA. My goal is to help you avoid paying it by accident.

IRMAA in plain English: the Medicare surcharge that looks back two years

IRMAA stands for Income-Related Monthly Adjustment Amount. That’s Medicare’s way of saying: if your income is above certain levels, you pay extra for Medicare Part B (doctor/outpatient coverage) and Part D (prescription drug coverage).

Two details matter more than everything else:

First, IRMAA is based on MAGI.

MAGI is “modified adjusted gross income.” In practical terms, think of it as your tax return income, plus a few add-backs. For most retirees, the big drivers are:

• IRA/401(k) withdrawals (including RMDs)

• Roth conversions (count as income even though you don’t receive cash)

• Capital gains from selling investments in a brokerage account

• Interest and dividends

• Rental income

• Some Social Security becomes taxable depending on your other income

Second, Medicare uses a two-year lookback.

Your Medicare premiums in 2026 are generally based on your 2024 tax return. So a one-time income spike can create a premium spike two years later.

This timing is why IRMAA feels unfair. It’s not happening “in the moment.” It’s delayed.

What income levels trigger IRMAA?

The thresholds change over time. Using the 2026 numbers as a reference point, IRMAA begins when MAGI exceeds:

• $109,000 for single filers

• $218,000 for married couples filing jointly

Once you cross the first line, Medicare adds a monthly surcharge on top of the standard Part B premium, and it adds a separate monthly surcharge for Part D.

In 2026, the Part B surcharge ranges from about $81.20 to $487.00 per month depending on the bracket, and Part D ranges from about $14.50 to $91.00 per month.

Two important clarifications:

• These are per person. A married couple can pay double.

• IRMAA is bracketed. Crossing a threshold by $1 can move you into the next bracket.

That “$1 problem” is where planning pays for itself.

Why large IRAs and brokerage accounts are the perfect IRMAA trap

If you have $500,000 to $5 million invested, there’s a good chance you have money in two places:

• Traditional retirement accounts (IRA/401(k)) that are tax-deferred

• A taxable brokerage account with appreciated investments

Each account type is useful. The issue is what happens when you start pulling levers without coordinating them.

Large IRA problem: RMDs are not optional

Once you reach RMD age, the IRS requires you to take a minimum distribution each year from traditional retirement accounts. That withdrawal is generally taxable income.

If your IRA is large, the RMD can be large. And it stacks on top of everything else.

Brokerage account problem: gains can be lumpy

In a brokerage account, you control when you sell. That’s good. But it also means you can accidentally create a big capital gain in one year.

Capital gains are income for IRMAA purposes.

So are big dividends.

So is interest.

Roth conversion problem: a smart tax move can still trip IRMAA

A Roth conversion moves money from a traditional IRA to a Roth IRA. You pay tax now, but future growth in the Roth can be tax-free.

Conversions can be excellent planning. But the conversion amount is added to your income in that year.

So you can do a “good” conversion and still create a Medicare premium problem two years later.

The most common IRMAA surprises I see

Here are the patterns that show up again and again for affluent retirees and near-retirees:

1. The first RMD year plus “normal life”

You start RMDs and also:

• sell some stock

• take a large IRA withdrawal for a big purchase

• have higher dividends in a strong market year

Individually, none of those are crazy. Combined, they can push MAGI over a threshold.

1. The “we didn’t take income” Roth conversion

You convert $150,000 to Roth and say, “But we didn’t spend it.”

Medicare doesn’t care whether you spent it. It’s still income.

1. The one-time liquidity event

• Selling a concentrated stock position

• Selling a rental property

• Selling a business

Even if it’s a great financial decision, it can create a two-year-later Medicare premium spike.

1. Widow/widower IRMAA shock

After a spouse dies, the survivor often moves from married filing jointly to single filing.

Same assets. Same income sources. Much lower IRMAA thresholds.

This is one of the most overlooked planning risks in retirement.

A realistic household example: how a “normal” year becomes an IRMAA year

Let’s make this concrete.

Assume Mark and Dana are both 66, recently retired, and have:

• $2.2 million in traditional IRAs

• $1.1 million in a taxable brokerage account (with $350,000 of embedded long-term gains)

• $120,000/year of Social Security combined if they both claim now (for simplicity)

They want $180,000/year to live on.

Year 1 plan (what many people do without coordination)

• Take $60,000 from the IRA to “top off” spending

• Sell $40,000 of appreciated brokerage shares to fund travel

• Do a $100,000 Roth conversion because they heard it’s smart

What shows up on the tax return?

• $60,000 IRA withdrawal: income

• $100,000 Roth conversion: income

• $40,000 sale: maybe $25,000 of capital gain (depends on basis)

• Plus dividends/interest

• Plus some Social Security becomes taxable because other income is higher

They didn’t do anything irresponsible. But their MAGI could easily jump over an IRMAA threshold.

Two years later, both Part B and Part D premiums rise. And because it’s per person, the household impact can be meaningful.

The planning point: it’s rarely one thing

IRMAA usually isn’t triggered by a single decision. It’s triggered by stacking decisions in the same tax year.

The core framework: treat IRMAA like a “tax bracket” you manage on purpose

Most retirees understand tax brackets at a high level: earn more, pay a higher rate on the next dollars.

IRMAA works similarly, but with a twist:

• It’s based on MAGI

• It’s a cliff between brackets

• It shows up two years later

• It affects both spouses separately

So the right mindset is not “avoid IRMAA at all costs.” The right mindset is:

1. Decide when paying IRMAA is worth it

Sometimes it is. If a Roth conversion saves you substantial future taxes, a year or two of IRMAA may be a fair trade.

1. Avoid paying IRMAA by accident

This is the big one. If you’re going to pay it, it should be because you chose to, not because you sold the wrong shares in December.

1. Smooth income across years when you can

Retirement gives you more control over income timing than your working years did. Use that control.

If you want the deeper “withdrawal sequencing” foundation behind this, we built it here: /post/retirement-withdrawal-strategies-tax-smart-order

The three levers that move the needle most

Lever 1: Withdrawal sequencing (which account you spend from)

The account you pull from changes your MAGI.

• Traditional IRA withdrawal: usually increases MAGI dollar-for-dollar.

• Roth withdrawal: generally does not increase MAGI.

• Brokerage withdrawal: only the gain portion increases MAGI (not the full amount you withdraw).

That means two retirees can spend the same $180,000 and have very different MAGI.

A practical approach many higher-asset retirees use:

• Use brokerage cash flow (dividends/interest) and selective sales for baseline spending

• Use IRA withdrawals to “fill” a target tax bracket and/or a target IRMAA bracket

• Use Roth as a pressure-release valve in years where income is already high

This is not a rigid rule. It’s a coordination exercise.

Lever 2: Capital gains timing (what you sell, and when)

In a brokerage account, you have a powerful tool: you can choose which lots to sell.

Two sales of $100,000 can create wildly different gains depending on cost basis.

That’s why “we sold $100,000” is not enough information. The question is: how much gain did you realize?

Common gain-related IRMAA mistakes:

• Selling a concentrated position all at once without modeling the gain

• Rebalancing a taxable portfolio in a single year after a strong market run

• Taking large mutual fund capital gain distributions you didn’t anticipate

If you want a deeper dive on how to manage gains in retirement without creating tax landmines, read: /post/capital-gains-retirement-brokerage-tax-planning

Lever 3: Roth conversion sizing (how much you convert, and in which years)

Roth conversions are one of the best tools to reduce future RMD pressure. But the size and timing matter.

Think of a conversion like pouring water into a glass.

• The glass is your tax bracket and your IRMAA bracket.

• Other income (RMDs, gains, interest, Social Security) is already in the glass.

• The conversion is what you add.

The goal is not “convert as much as possible.” The goal is “convert the right amount.”

In many plans, the best conversion years are:

• Early retirement before Social Security starts

• Before RMDs begin

• In years where you have lower capital gains

We wrote a dedicated piece on this exact coordination problem here: /post/roth-conversions-early-retirement-sizing-tax-brackets-medicare

Where retirees misapply the advice (and what I’d do instead)

Overrated: “Just keep income low.”

If you have $500,000 to $5 million invested, “keeping income low” can be a trap.

You might avoid IRMAA this year but create:

• larger RMDs later

• higher lifetime taxes

• a bigger survivor tax problem

Sometimes paying a controlled amount of tax (and even IRMAA) now reduces the chance of paying a lot more later.

Underrated: Managing the two-year lookback window

The lookback means your 63–65 window matters, and your first RMD years matter.

If you’re 64 and you create a big income spike, that can hit your Medicare premiums at 66.

If you’re 72+ and RMDs are ramping up, a big gain year can stack on top and push you into higher brackets.

Misunderstood: “Capital gains are taxed lower, so they don’t matter.”

Capital gains may have lower tax rates than IRA withdrawals, but they still count in MAGI for IRMAA.

So a gain can be “tax-efficient” and still be “Medicare-inefficient.”

Misapplied: Giant Roth conversions without a Medicare plan

I like Roth conversions when they’re sized correctly.

But I see retirees convert a large amount in one year because they’re excited about tax-free growth, without realizing:

• they may be crossing multiple IRMAA brackets

• they may be increasing the taxable portion of Social Security

• they may be creating a two-year-later premium spike

The right conversion is the one that fits your whole plan.

RMDs and IRMAA: the slow-moving wave that catches people at 73+

RMDs are the most common long-term IRMAA driver for affluent retirees.

Here’s why:

• Your IRA grows for decades.

• Then RMDs force taxable distributions.

• Those distributions increase MAGI.

• Higher MAGI increases the chance you cross IRMAA thresholds.

If you’re sitting on a large pre-tax balance, the question isn’t “will RMDs matter?” The question is “how do we keep them from controlling everything?”

Three planning moves that often help:

1. Reduce the future IRA balance before RMDs begin

That’s where carefully sized Roth conversions can shine.

1. Coordinate charitable giving if you’re charitably inclined

Qualified charitable distributions (QCDs) can satisfy RMDs for many retirees while keeping taxable income lower. This can help manage MAGI and potentially IRMAA. (QCD rules are specific, so this is a planning conversation, not a DIY assumption.)

1. Don’t let “tax deferral” become “tax concentration”

Many high earners did exactly what they were supposed to do: max the 401(k), defer taxes, build wealth.

The unintended result can be a retirement balance sheet that’s too concentrated in pre-tax dollars. That concentration is what turns RMDs into a Medicare premium issue.

We go deeper on RMD control strategies here: /post/rmd-planning-reduce-taxes-retirement-income

Healthcare coordination: why IRMAA planning is also cash-flow planning

IRMAA isn’t just a tax concept. It’s a cash-flow concept.

Medicare premiums are real monthly expenses. When they rise, your spending plan has to absorb it.

Two practical points:

First, IRMAA hits both Part B and Part D.

Part B is the big one most people notice. Part D is smaller but still meaningful.

Second, the surcharge is per person.

So when a couple crosses a bracket, the household cost can be double what they expected.

This is why I like to model IRMAA the same way we model taxes: as part of the retirement paycheck.

If you’re still sorting out Medicare enrollment decisions at 65, start here: /post/medicare-at-65-affluent-retirees-enrollment-coverage-basics

And if Social Security timing is part of your plan, remember: Social Security can increase taxable income depending on your other income sources, which can affect MAGI and IRMAA. Coordination matters. We address that here: /post/social-security-timing-high-income-retirees-taxes-medicare

The retiree questions that matter most right now (with straight answers)

How do large IRAs and brokerage accounts affect my Medicare premiums?

Large traditional IRAs can create higher taxable income through withdrawals and RMDs. Brokerage accounts can create capital gains when you sell. Both types of income increase MAGI, and higher MAGI can trigger IRMAA surcharges for Part B and Part D.

What income levels trigger IRMAA surcharges for Medicare?

IRMAA begins when MAGI crosses specific thresholds that change over time. For 2026, the first threshold is $109,000 (single) and $218,000 (married filing jointly). Above that, Medicare adds monthly surcharges to Part B and Part D premiums based on your bracket.

How can I avoid or reduce IRMAA charges in retirement?

You reduce avoidable IRMAA by coordinating:

• which accounts you spend from (withdrawal sequencing)

• when you realize capital gains (gain timing and lot selection)

• how much you convert to Roth in any given year (conversion sizing)

The most effective approach is to project MAGI before year-end and intentionally stay within a chosen IRMAA bracket unless there’s a clear reason to exceed it.

What are the consequences of required minimum distributions on Medicare premiums?

RMDs increase taxable income, often substantially for large IRA balances. That higher income can push you into IRMAA brackets, raising Part B and Part D premiums two years later. RMDs also reduce your flexibility because they’re required.

How do capital gains impact Medicare Part B and Part D surcharges?

Capital gains count in MAGI. A large realized gain in one year can move you into a higher IRMAA bracket, increasing Part B and Part D premiums two years later. This is especially common when retirees sell a concentrated position, rebalance aggressively, or have a one-time liquidity event.

A planning timeline that actually matches how IRMAA works

If you want IRMAA to be predictable, you need to think in windows, not calendar years.

Ages 60–62: set up the runway

• Review account “tax diversification” (pre-tax vs Roth vs brokerage)

• Identify concentrated positions and embedded gains

• Start mapping future RMD size and tax brackets

Ages 63–65: the Medicare lookback becomes real

• Income at 63 can affect premiums at 65

• Income at 64 can affect premiums at 66

• Income at 65 can affect premiums at 67

This is a prime time for controlled Roth conversions and intentional gain realization, because you may still have flexibility before RMDs and before Social Security (depending on your claiming plan).

First RMD years (often 73+): avoid stacking events

• RMDs are now a baseline income layer

• Be careful with large conversions and large gains in the same year

• Use Roth withdrawals strategically when income is already high

When a spouse dies: re-run the entire IRMAA plan

The survivor’s tax filing status changes, and IRMAA thresholds are less forgiving. This is not a “later” issue. It’s an immediate planning issue.

One more tool: when an IRMAA appeal is appropriate

Sometimes IRMAA is assessed based on a year that doesn’t reflect your current reality.

Medicare allows appeals for certain life-changing events, such as:

• retirement (work stoppage)

• death of a spouse

• divorce

• loss of pension income

The form commonly used is SSA-44.

Appeals can be worth pursuing when the lookback year is artificially high compared to your current income.

This is not a strategy to “game” the system. It’s a relief valve for legitimate changes.

Practical action list: what to do before year-end to reduce avoidable IRMAA

If you only take one thing from this article, let it be this: IRMAA is often a year-end planning problem.

Here’s the checklist I’d use with you:

1. Estimate your current-year MAGI now

Not in April when the tax return is done. Now.

Include:

• IRA withdrawals and RMDs

• expected interest/dividends

• realized capital gains so far

• planned Roth conversions

• any one-time income items

1. Identify the next IRMAA threshold above you

If you’re close, treat that line like a decision point.

Crossing it may be fine. But it should be intentional.

1. If you need cash, choose the least MAGI-expensive source

Sometimes that’s:

• selling high-basis lots in the brokerage account

• using Roth for part of the spending

Sometimes it’s taking IRA dollars because you’re intentionally filling a tax bracket.

The right answer depends on your full picture.

1. If you’re doing Roth conversions, size them to a target

Pick a bracket target (tax bracket and/or IRMAA bracket) and convert up to it.

Avoid the “one big conversion because we have time” approach unless you’ve modeled the Medicare impact.

1. Plan gains, don’t stumble into them

Before you sell:

• check embedded gain

• check whether mutual funds will distribute gains

• consider spreading sales across tax years

1. Coordinate Social Security decisions with your tax plan

Social Security can become more taxable when other income rises. That can amplify MAGI and IRMAA.

If you want a structured way to think about this, use: /post/social-security-timing-high-income-retirees-taxes-medicare

1. Stress-test the plan for the first RMD year

Project what income looks like when RMDs begin.

If it’s already near or above IRMAA thresholds, you may want to act earlier (often via conversions or charitable strategies).

A final advisor’s note: the goal isn’t “never pay IRMAA”

Some households should pay IRMAA in certain years.

If you’re converting to Roth to reduce future RMDs, or realizing gains to diversify away from a concentrated position, a surcharge may be a reasonable cost.

But what I don’t want for you is the classic story:

“We didn’t know. We didn’t plan. We crossed the line by a little. And now we’re paying more for two years later.”

IRMAA is a planning issue, not a punishment. When we coordinate withdrawals, gains, and conversions, we can usually make Medicare premiums far more predictable.

If you want an IRMAA-aware retirement income and tax planning review, I’ll help you map your MAGI drivers, set targets, and coordinate RMD strategy, Roth conversion sizing, and capital gains management across tax years.

Book an appointment here: http://grapewealthmanagement.salesmate.io/meetings/#/grapewealthmanagement/user/1