7 Ways a Roth Conversion Can Trigger an IRMAA Bill You Didn’t See Coming
You did the Roth conversion. Smart move. You reduced your future RMDs, diversified your tax exposure, and gave your heirs a cleaner inheritance. Then, two years later, a letter arrived from Social Security. Your Medicare premiums just went up, by a lot.
This is how most retirees learn about IRMAA. Not from their advisor, not from a planning session. From a letter, after it’s already too late to change anything.
The Income-Related Monthly Adjustment Amount (IRMAA) is Medicare’s income-based surcharge on Part B and Part D premiums. In 2026, it kicks in for individuals with modified adjusted gross income (MAGI) above $109,000 and for married couples filing jointly above $218,000. The surcharge runs in five tiers, with total annual costs ranging from $1,148 per person at Tier 1 all the way to $6,936 per person at Tier 5. For couples, every figure doubles. What makes it so easy to miss: IRMAA is calculated using your tax return from two years prior. Your 2026 Medicare premium is based on your 2024 MAGI. By the time the bill arrives, the income event that caused it is long gone.
IRMAA is a Medicare surcharge added to your Part B and Part D premiums, that applies when your modified adjusted gross income (MAGI) crosses certain thresholds. In 2026, those thresholds start at $109,000 for single filers and $218,000 for married couples filing jointly, based on your 2024 tax return. Because IRMAA tiers are cliff-based and not gradual, even $1 over a threshold triggers the full surcharge for that tier. Income events like Roth conversions, RMDs, capital gains, and pension lump sums made today will affect your Medicare bills in 2028.
I
2026 IRMAA Surcharges at a Glance
Based on 2024 MAGI. Surcharges apply per person; couples pay each spouse’s applicable tier.
| Tier | Single MAGI | Married Joint MAGI | Annual IRMAA / Person | Annual IRMAA / Couple |
|---|---|---|---|---|
| No IRMAA | ≤$109,000 | ≤$218,000 | $0 | $0 |
| Tier 1 | $109,001–$137,000 | $218,001–$274,000 | $1,148 | $2,297 |
| Tier 2 | $137,001–$171,000 | $274,001–$342,000 | $2,886 | $5,772 |
| Tier 3 | $171,001–$205,000 | $342,001–$410,000 | $4,620 | $9,240 |
| Tier 4 | $205,001–$499,999 | $410,001–$749,999 | $6,355 | $12,710 |
| Tier 5 | $500,000+ | $750,000+ | $6,936 | $13,872 |
Source: CMS 2026 Medicare Parts B Premiums and Deductibles; Income Lab IRMAA Brackets 2026 Guide
1
A Roth Conversion That Pushed You One Dollar Over a Tier
This one’s the classic. You did a $60,000 Roth conversion in a year when your other income was $216,000. Total MAGI: $276,000. The joint IRMAA threshold for Tier 2 starts at $274,001. You’re just $1,999 over.
That dollar-and-change over the line doesn’t trigger a small, proportional surcharge. It triggers the full Tier 2 penalty for the entire year. In 2026, the jump from Tier 1 to Tier 2 costs a couple an additional $3,475 per year pulled directly from your Social Security check, every month.
Here’s what most people miss about the cliff mechanic: IRMAA brackets have no gradual phase-in. Every tier is a step function. Go one dollar over, pay the whole next tier. This means the last few thousand dollars of a Roth conversion can carry a marginal cost that dwarfs any tax rate you’ve ever seen.
Before executing a conversion, calculate your “IRMAA room”, the dollars between your projected MAGI and the next tier boundary. A careful conversion caps just below that line. The planning happens before you call your custodian, not after.
Source: CMS 2026 Medicare Parts B Premiums and Deductibles
2
Required Minimum Distributions You Didn’t Plan Around
At 73, RMDs begin. If you’ve spent decades contributing to a traditional IRA or 401(k), those distributions can be substantial and they count fully toward your MAGI for IRMAA purposes.
A retiree with $1.5 million in a traditional IRA faces an RMD of roughly $56,000 in the first year (using the IRS Uniform Lifetime Table). Add that to Social Security and investment income, and a couple that was comfortably under the IRMAA threshold in their early retirement years can find themselves in Tier 1 or Tier 2 permanently.
This is exactly why doing Roth conversions before RMDs begin is one of the most effective IRMAA reduction strategies available. Converting in your 60s when income may be lower and you haven’t yet hit the mandatory distribution age, can reduce the size of your future RMDs and keep your MAGI lower for decades.
Model your projected RMDs now and factor the IRMAA impact into your conversion ladder. The window between retirement and age 73 is valuable planning time that many people leave unused.
Source: IRS Publication 590-B: Distributions from Individual Retirement Arrangements
3
Selling a Vacation Home or Investment Property
You bought a lake house 25 years ago for $180,000. You sell it this year for $620,000. Unlike a primary residence, a vacation property doesn’t get the $250,000/$500,000 capital gains exclusion. The full gain potentially, $440,000, hits your MAGI in the year of the sale.
Add that $440,000 gain to a couple’s $200,000 in other income and you have MAGI of $640,000. That’s Tier 4, $12,710 in combined annual IRMAA surcharges two years after the sale. The two-year lookback makes this especially easy to miss: the sale happens in Year 1, the letter from Social Security arrives in Year 3, and by then most people have completely forgotten the connection.
Don’t plan a large Roth conversion in the same year as a property sale. You may already be heading deep into a high IRMAA tier; adding a conversion on top compounds the damage without meaningful benefit.
Source: IRS Topic No. 701: Sale of Your Home
4
Exercising Stock Options or Receiving Deferred Compensation
For executives who carry stock options or deferred compensation into early retirement, the timing of exercises and elections can dramatically affect MAGI. Non-qualified stock options (NQSOs) are taxed as ordinary income when exercised, the full spread goes directly into MAGI, dollar for dollar.
A $300,000 NQSO exercise, even if it was a planned “clean up the equity before retirement” move, can land a couple in Tier 4 for the two-year IRMAA lookback period. That’s $12,710 in Medicare surcharges added to the bill. Deferred compensation payouts, where the timing is often fixed at election, can create the same one-year MAGI spike.
If you have remaining options or deferred comp elections in play, coordinate the exercise or payout schedule with your IRMAA tier projections. Sometimes stretching a payout over two years rather than one saves more in IRMAA than the financial cost of the delay.
Source: IRS Topic No. 427: Stock Options
$12,710
Total annual IRMAA surcharge for a married couple in Tier 4 in 2026, on top of standard Medicare premiums, triggered by joint MAGI between $410,001 and $749,999.
5
Taking a Pension Lump Sum Instead of Monthly Payments
Some pension plans offer a one-time lump sum option at retirement. A $450,000 lump sum can look attractive compared to $2,200 per month for life. But that $450,000 is generally fully taxable as ordinary income in the year it’s received, and it counts fully toward MAGI.
A couple taking a pension lump sum of $450,000 in a year when they also have $150,000 in other income faces combined MAGI of $600,000. Two years later, they’re in Tier 4 for Medicare, a $12,710 IRMAA surcharge for the year. The next year, MAGI drops back to $150,000 and they’re below the threshold again. They pay the surcharge once, but it’s real money that should have factored into the lump sum vs. annuity comparison.
Whether the lump sum is the right choice depends on life expectancy, survivor needs, and investment risk tolerance. But IRMAA is a legitimate cost to factor in, one that often gets left off the comparison worksheet entirely.
Source: IRS Publication 575: Pension and Annuity Income
6
Inheriting a Traditional IRA and Missing the 10-Year Rule
When you inherit a traditional IRA from someone other than a spouse, the SECURE Act (as modified in 2022) generally requires you to fully distribute the account within 10 years. And if the original owner had already started taking RMDs, annual distributions are required throughout that window, not just a lump sum at year 10.
If you inherit a $500,000 traditional IRA at 64, you may need to take roughly $50,000 per year in mandatory distributions. Added to your other retirement income, that could push your MAGI above the IRMAA threshold in every year of that 10-year window. This is an easily overlooked scenario because the income doesn’t feel like “yours”, you’re distributing someone else’s account. But MAGI doesn’t distinguish sources. Inherited IRA distributions count just like any other taxable income.
If you’ve recently inherited a traditional IRA, model out the annual distributions across the full 10-year period and map the IRMAA impact year by year. The optimal distribution pace isn’t always front-loading or back-loading it depends on your specific income picture.
Source: IRS Publication 590-B: Distributions from Individual Retirement Arrangements; SECURE 2.0 Act of 2022
7
The Widowhood Trap: Same Income, Higher Tier
This is the one that almost nobody warns you about. And it may be the most consequential IRMAA scenario of all.
Consider a couple with $300,000 in combined MAGI filing jointly. They’re in IRMAA Tier 2 ($274,001–$342,000 for joint filers). Their combined Medicare surcharge is $5,772 per year, $2,886 each.
Then one spouse dies.
The survivor still has $300,000 in income. Nothing about their financial life has changed, same pensions, same Social Security, same investment distributions. But their filing status changes to single. And for single filers, $300,000 MAGI falls in Tier 4 ($205,001–$499,999). That’s $6,355 per year in IRMAA surcharges, compared to $2,886 they were paying as part of a couple.
The annual IRMAA increase for the surviving spouse: $3,469 per year. No income change. Just a filing status change.
This happens because the income thresholds for single filers are not simply half the joint thresholds, they’re compressed. A widow or widower gets a one-year grace period using the married filing jointly thresholds in the year of a spouse’s death. After that, single rates apply permanently.
If a surviving spouse files Form SSA-44 with the Social Security Administration promptly after the death, they may be able to request a new IRMAA determination based on the change in circumstances, particularly if income has also dropped alongside the filing status change.
Couples with MAGI in the $220,000–$400,000 range should specifically model what the IRMAA picture looks like for the surviving spouse. This isn’t morbid planning, it’s the kind of conversation that can save thousands of dollars per year, starting the year it matters most.
Source: Income Lab, IRMAA Brackets 2026 Guide; CMS 2026 Medicare Parts B Premiums and Deductibles; SSA: Request to Lower an IRMAA
I
Common Questions About IRMAA and Medicare Surcharges
What is IRMAA and how does it work in 2026?
IRMAA (Income-Related Monthly Adjustment Amount) is a Medicare surcharge added to your Part B and Part D premiums when your MAGI exceeds certain thresholds. In 2026, the standard Part B premium is $202.90 per month; IRMAA tiers push that to between $284.10 and $689.90 per month depending on income. The surcharge is calculated using your tax return from two years prior, so your 2026 IRMAA is based on your 2024 MAGI. Single filers with MAGI above $109,000 and joint filers above $218,000 are subject to surcharges.
Does a Roth conversion affect my Medicare premiums?
Yes, and the effect arrives two years after the conversion. A Roth conversion increases your MAGI in the year it’s executed, and that MAGI flows into the IRMAA calculation two years later. Because IRMAA tiers are cliff-based, not gradual—even, a conversion that pushes you one dollar over a tier boundary triggers the full surcharge for the higher tier. The impact can range from $1,148 to $6,936 per person, per year, depending on which tier you cross into.
Can I appeal an IRMAA surcharge if my income has dropped?
Yes. If your income has fallen due to a qualifying life-changing event, retirement, death of a spouse, divorce, work reduction, loss of income-producing property, or loss of pension income, you can file Form SSA-44 with the Social Security Administration to request a new IRMAA determination based on more recent income. Note that one-time capital gains from asset sales are generally not qualifying events under this process.
What counts as MAGI for IRMAA purposes?
MAGI for IRMAA equals your adjusted gross income (AGI) plus any tax-exempt interest income. It includes wages, self-employment income, taxable Social Security benefits, traditional IRA and 401(k) distributions, Roth conversions, capital gains, pension income, and municipal bond interest. It does not include Roth IRA distributions (assuming the account has been open at least five years and you’re over 59½), HSA withdrawals used for qualified medical expenses, or the non-taxable portion of Social Security.
When should I start planning around IRMAA?
Ideally, at least two years before Medicare begins, meaning around age 63. The two years before you enroll are especially valuable because Roth conversions and other income decisions in those years affect your very first IRMAA determination at 65. If you’re already on Medicare, IRMAA planning should be part of every annual income review: any significant income event this year will show up in your Medicare bill in two years.
This Is Where It Gets Personal
The seven triggers above aren’t hypotheticals. They show up in real retirements every year, usually as a surprise, and usually at the worst possible time. The specific math depends on your income sources, your account mix, the timing of your conversions, and as item seven shows, factors you may not even think to model. Rules of thumb only get you so far. If you’d like to talk through how any of this fits your situation, the team at Madison Partners is happy to have that conversation.
This content is for educational purposes only and should not be considered financial, tax, legal, or investment advice. Individual circumstances vary, and readers should consult with a qualified financial advisor, tax professional, or attorney before making decisions based on this information. Madison Partners does not guarantee the accuracy of third-party data cited herein.
