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.
For higher-income retirees with large IRAs and taxable brokerage accounts, IRMAA can be a significant expense. A premium notice may arrive long after the income-producing decision, when options are more limited. A qualifying life-changing event or other permitted correction may still support a request for a new determination.
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.” For IRMAA, it means adjusted gross income on your federal tax return plus tax-exempt interest. For most retirees, the big drivers are:
- The taxable portion of IRA/401(k) withdrawals, including RMDs
- The taxable portion of Roth conversions, even when no cash is received
- Capital gains from selling investments in a brokerage account
- Interest, including tax-exempt 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 one reason to compare the premium cost before making an income-producing decision.
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
Traditional IRA RMDs begin at the applicable age for your birth year, generally 73 or 75 under current law; people born in 1960 or later begin at 75. Earlier birth cohorts follow their existing start-age rules. Employer-plan rules can differ, including a possible still-working exception. The taxable portion of a distribution generally increases 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.
A conversion can increase current-year taxable income. Only its taxable portion is included; after-tax IRA basis and the applicable tax rules need to be considered.
So you can do a “good” conversion and still create a Medicare premium problem two years later.
Potential IRMAA surprises to consider
Here are possible situations for retirees and near-retirees to discuss with their tax and financial professionals:
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.
2. The “we didn’t take income” Roth conversion
For example, a fully taxable $150,000 Roth conversion can increase income even if none of that money is spent.
The taxable portion matters for IRMAA even when the money stays invested.
3. 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.
4. 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 hypothetical household example: how several decisions can affect MAGI
The following fictional assumptions illustrate income categories only. They do not describe actual clients, typical benefits, investment performance, a recommended transaction, or a projected tax or premium outcome.
Assume Mark and Dana are a fictional married couple filing jointly, both 66 in 2026, recently retired, and have:
- $2.2 million in traditional IRAs, assumed entirely pre-tax for this illustration
- $1.1 million in a taxable brokerage account (with $350,000 of embedded long-term gains)
- An assumed $80,000/year of combined Social Security benefits; this is an illustrative input, not an estimate of anyone’s entitlement
Assume they need $180,000 of gross cash for living expenses and travel. Income taxes are separate and are not calculated in this illustration.
Illustrative transactions to evaluate, not a recommended plan
- Take a hypothetical $60,000 gross IRA withdrawal toward the cash need
- Sell $40,000 of appreciated brokerage shares to fund travel
- Consider a hypothetical, fully taxable $100,000 Roth conversion, with conversion taxes funded separately from the stated cash need
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
These items can raise MAGI, but this illustration does not calculate an actual tax bill or establish which future IRMAA threshold would apply. Future-year thresholds and the complete tax return matter.
A higher MAGI in 2026 could affect premiums in 2028, depending on the applicable thresholds, coverage and other circumstances. Surcharges apply per person.
The planning point: consider decisions together
One large income event or several smaller decisions in the same tax year can affect IRMAA.
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.
2. 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.
3. Smooth income across years when you can
Retirement gives you more control over income timing than your working years did. Use that control.
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.
- Qualified Roth withdrawals: generally do not increase MAGI; nonqualified earnings can be taxable.
- 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
Lever 3: Roth conversion sizing (how much you convert, and in which years)
Roth conversions can reduce a pre-tax balance and future RMDs, but their current tax cost, size and timing need to be evaluated.
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.”
Years that may be worth evaluating for a conversion include:
- Early retirement before Social Security starts
- Before RMDs begin
- In years where you have lower capital gains
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.
Once RMDs begin at your applicable age, a large gain can add to that income and affect your tax bracket or IRMAA.
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.
A large conversion can have effects that are easy to overlook, including:
- 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: how required distributions can affect Medicare costs
RMDs can be a long-term IRMAA driver for retirees with substantial pre-tax balances.
Here’s why:
- Investment growth over time can increase a pre-tax IRA balance, although returns are uncertain.
- 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.
2. 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.)
3. 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.
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.
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
These years may be worth evaluating for Roth conversions or gain realization, but income in this window can affect the first years of Medicare. Suitability depends on the full plan and the applicable future thresholds.
First RMD years, at your applicable age: 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
A surviving spouse’s filing status may change after the year of death, subject to the rules for joint returns and qualifying surviving spouses. Reassess the applicable IRMAA threshold and whether a qualifying life-changing event supports a new determination.
One more tool: when an IRMAA appeal is appropriate
Sometimes IRMAA is assessed based on a year that doesn’t reflect your current reality.
Social Security may make a new IRMAA determination after a qualifying life-changing event that reduces income, such as:
- retirement (work stoppage)
- death of a spouse
- divorce
- loss of pension income
The form commonly used is SSA-44.
A request may be appropriate when a qualifying event reduces income. A lower-income year alone does not necessarily qualify; confirm the evidence and rules with Social Security.
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, including tax-exempt interest, and dividends
- realized capital gains so far
- planned Roth conversions
- any one-time income items
2. 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.
3. 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.
4. If you’re doing Roth conversions, size them to a target
Compare a proposed conversion with your tax and IRMAA targets, other costs, and alternatives before deciding whether to convert.
Avoid the “one big conversion because we have time” approach unless you’ve modeled the Medicare impact.
5. 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
6. Coordinate Social Security decisions with your tax plan
Social Security can become more taxable when other income rises. That can amplify MAGI and IRMAA.
7. 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”
For some households, an income-producing decision may still be reasonable after accounting for IRMAA.
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.
An illustrative concern to avoid is:
“We crossed an income threshold without realizing that it could affect Medicare premiums two years later.”
Coordinating withdrawals, gains and conversions can help you estimate potential Medicare costs. Future rules, thresholds and your circumstances can change, and planning does not guarantee lower taxes or premiums.
If you would like to discuss your retirement-planning questions, you can choose a time for an introductory virtual meeting. Confirm that the firm can serve you in your state before establishing an advisory relationship.
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Sources and important information
The official sources below explain the rules discussed here. Future thresholds and your circumstances can change; use the applicable rules for the year of a decision.
- SSA: IRMAA income and timing
- CMS: 2026 Medicare premiums and IRMAA
- IRS: applicable RMD ages
- IRS Topic 451: IRA tax treatment
- IRS Publication 915: Social Security taxation
- SSA: request a lower IRMAA after a qualifying life event
This article provides general education. It does not assess your circumstances or replace individual investment, tax, or legal guidance. Review decisions with the appropriate professionals. Investing can result in losses.
The household examples are fictional educational assumptions. They do not describe actual clients or show investment, tax-saving or Medicare-premium results. No strategy or outcome is guaranteed.