There is a version of Roth conversion planning where someone does everything right — targets the right bracket, uses outside funds to pay the tax, converts at a lower rate than their projected future RMD rate — and still ends up paying more than they expected. The reason is IRMAA. IRMAA — the Income-Related Monthly Adjustment Amount — is a Medicare surcharge that most people have never heard of until it shows up on their bill. It's added to Medicare Part B and Part D premiums for beneficiaries whose income exceeds certain thresholds. And because Medicare uses a two-year lookback to set premium
A Roth conversion is treated by the IRS as ordinary income in the year it occurs. That additional income increases your Modified Adjusted Gross Income. The Social Security Administration uses your MAGI from two years prior to set your Medicare premiums for the current year. That two-year lag is what creates the trap. If you convert $150,000 in 2024, that conversion increases your 2024 MAGI. The SSA uses that 2024 MAGI to determine your 2026 Medicare premiums. The surcharge arrives in 2026. By then, the income event is already two years old — and there is often no way to connect the bill to the decision that caused it.
Conversion Year MAGI Year Used **Medicare Premium Year Affected** 2024 2024 2026 2025 2025 2027 2026 2026 2028 This table illustrates the lag that makes IRMAA planning counterintuitive. Planning a 2026 conversion means thinking about what your 2028 Medicare bill will look like.
2026 MAGI (Single) Annual Extra Cost vs. Impact on Conversion Baseline Math ≤ $109,000 $0 No IRMAA — full conversion budget available $109,001 $137,000 ~$1,148/yr Tier 1 crossed — significant annual surcharge $137,001 $171,000 ~$2,884/yr Tier 2 — conversion benefit must outweigh this cost $171,001 $205,000 ~$4,582/yr Tier 3 — conversion needs strong long-term case $205,001 $499,999 ~$6,355/yr Tier 4 — rarely worth crossing for marginal gain Source: CMS 2026 Medicare Part B and Part D premium tables. Single filer thresholds shown; married filing jointly thresholds are approximately double.
The IRMAA cliff doesn't make Roth conversions inadvisable — it makes precision essential. There are several approaches that allow meaningful conversion activity while managing IRMAA exposure. The most direct approach is capping conversions just below the next IRMAA tier. For a single filer with a $95,000 MAGI before conversion, the Tier 1 cliff is at $109,000 — leaving a conversion budget of roughly $14,000 before crossing into surcharge territory. Small by the standards of large IRA holders, but worth executing at a clean 22% rather than 22% plus a $1,148 Medicare surcharge. A second approach is timing conversions to years when IRMAA exposure is lower. A year with a large capital gain, a pension lump sum, or a property sale is a poor year for large conversions. A year with lower income — perhaps when a part-time consulting contract ends, or before a spouse claims Social Security — may allow a larger conversion with less IRMAA risk. For retirees who have already triggered IRMAA due to a one-time income event, the SSA-44 appeal process is available. If the income spike in the lookback year was caused by a qualifying life-changing event — retirement, death of a spouse, loss of pension income, reduction in work — you can petition the SSA to use a more recent, lower-income year to set your premium. The process requires documentation, but it's a real option that most retirees have never been told exists.
IRMAA is a cliff system, not a ramp. If your income is $1 over a|Tier 2 (over $137,000) adds approximately $2,884. A $500|QCDs — Qualified Charitable Distributions — are one of the only|RMD obligation at a 0% effective income tax rate — no IRMAA impact,
CMS 2026 Medicare Part B and Part D premium tables. Single filer