Medicare IRMAA Planning Guide: How to Avoid Premium Surcharges in Retirement

Most people focus on investment returns and withdrawal rates in retirement. Many forget that a single dollar of extra income at the wrong time can quietly add $974 to $6,936 per year in Medicare premiums — per household. That's IRMAA, and it's entirely manageable with a year or two of lead time.

What IRMAA is

IRMAA stands for Income-Related Monthly Adjustment Amount. It's Medicare's income surcharge — a tiered premium add-on that kicks in once your income crosses certain thresholds. It applies to both Part B (medical) and Part D (prescription drug) coverage.

The standard 2026 Part B premium is $202.90/month per person. At the first IRMAA tier, it jumps to $284.10 — that's $81.20 more per month, or about $975 extra per year, per person. At the top tier it reaches $689.90/month, or roughly $5,844 per year extra above the base, per person. A couple where both spouses are on Medicare doubles every one of those figures.

The 2026 IRMAA bracket table

IRMAA is based on your MAGI (Modified Adjusted Gross Income) from two years prior. Your 2026 premiums are determined by your 2024 tax return.¹

Single filers (and married filing separately — see note below)

Married filing jointly

Part B premium is charged per person. A couple where both spouses are on Medicare each pay the premium for their applicable tier. Part D surcharge is added to whatever your plan's base premium is.
Sources: CMS 2026 Medicare Part B premium fact sheet¹; Kiplinger 2026 IRMAA bracket table.²

IRMAA tier estimator

Enter your estimated 2024 MAGI and filing status to see which tier you're in and what it costs.

What counts as MAGI for IRMAA

IRMAA MAGI is your regular MAGI (AGI plus tax-exempt interest) with no special deductions for retirement. That means every dollar of the following counts:

• Wages and salary — if you still work part-time
• Traditional IRA / 401(k) withdrawals — fully counted
• Required minimum distributions (RMDs) — counted in full, even if you don't need the money
• Roth conversions — every dollar converted shows up as ordinary income
• Social Security (taxable portion) — up to 85% of your benefit may be included
• Capital gains — including the sale of a home (above the $500K exclusion for couples)
• Interest, dividends, and rental income
• Tax-exempt municipal bond interest — added back into MAGI even though it's not taxed

What doesn't count: Roth IRA distributions (after the five-year rule), Health Savings Account withdrawals for medical expenses, and life insurance proceeds.

The RMD-IRMAA cascade — a worked example

Here's how a couple with a modest portfolio can accidentally cross an IRMAA tier they didn't expect.

Tom and Diane, both age 74. They have $1.8M in traditional IRAs. Their annual spending is $95,000. Social Security brings in $48,000/year combined. They figure their portfolio draw is about $47,000 — well under any IRMAA threshold.

What they missed: the RMD calculation isn't based on what they need, it's based on the account balance.

• RMD on $1.8M at age 74: divisor of 25.5 (Uniform Lifetime Table) → $70,600 required withdrawal
• Even if they spend only $47,000 of that, the full $70,600 hits their MAGI
• SS taxable portion: $40,800 (85% of $48K)
• Total MAGI: $70,600 + $40,800 = $111,400
• Result: Tier 1 IRMAA for both spouses — wait, as a couple they're MFJ and $111K is below the $218K MFJ threshold. They're fine.

Now fast-forward two years. The portfolio has grown despite withdrawals, and the IRA is at $1.95M at age 76.

• RMD at 76: divisor of 23.7 → $82,300 required withdrawal
• COLA has increased SS to $51,000; taxable portion: $43,350
• Total MAGI: $82,300 + $43,350 = $125,650
• Still fine for MFJ — but only $92,000 below the $218K threshold

Now add one more event: they sell appreciated stock to rebalance — $85,000 in capital gains. MAGI jumps to $210,650 — still below $218K, but barely. A Roth conversion of $30,000 that year would push them to $240,650 and into Tier 1 IRMAA at $3,409/year per person — $6,818 extra for the household. Without realizing it, the conversion that was supposed to save taxes quietly triggered a Medicare surcharge that partially offset the benefit.

6 strategies to manage IRMAA exposure

1. Income smoothing across years

The two-year lookback gives you a predictable planning window. If you know a high-income event is coming (large RMD, real estate sale, taxable Roth conversion), spread it across two or three tax years if possible. Staying just under a tier boundary for both years eliminates the surcharge entirely.

2. Roth conversions in the early-retirement window

The years between retirement and age 73 (when RMDs begin) are often the lowest-income years of your retirement. Converting traditional IRA money to Roth in those years reduces future RMDs — and future IRMAA exposure. The tradeoff: conversions count as income in the year of conversion, so they can trigger IRMAA in the years two years after conversion. Careful bracket management is essential. See our full guide: Roth Conversion Window.

3. Qualified Charitable Distributions (QCDs)

If you're 70½ or older and make charitable gifts, a QCD lets you transfer up to $111,000 per person in 2026 directly from your IRA to charity — and that amount is excluded from your income entirely. It satisfies your RMD without adding to your MAGI. For a couple, that's potentially $222,000 in excluded income.³

Example: Tom and Diane donate $25,000/year to their church. Rather than taking the $25,000 as an RMD and then donating (which still counts as MAGI for IRMAA), they do a $25,000 QCD. Their MAGI drops by $25,000 — potentially keeping them out of a higher tier.

4. Managing capital gains timing

Large capital gains from portfolio rebalancing, investment property sales, or business sales can spike MAGI dramatically in the year of sale — two years before the IRMAA effect is felt, but felt for an entire calendar year. Consider installment sales for investment property, tax-loss harvesting to offset gains, or spreading rebalancing over multiple years.

5. Using a QLAC to defer RMDs

A Qualified Longevity Annuity Contract (QLAC) lets you move up to $200,000 from a traditional IRA or 401(k) into a deferred income annuity. That balance is excluded from your RMD calculation until the annuity starts (you can defer to as late as age 85). For a couple, that's up to $400,000 in balances not counted in the RMD each year — meaningfully shrinking MAGI in the early retirement years.⁴

6. Roth 401(k) conversions (SECURE 2.0)

Starting in 2024, Roth accounts inside employer plans (401(k), 403(b), TSP) no longer have lifetime RMD requirements. If your employer plan allows in-plan Roth rollovers, or if you've left the employer and can roll to a Roth IRA, those balances will never generate forced RMD income — permanently reducing future IRMAA exposure with each dollar converted.

Appealing IRMAA — using SSA Form SSA-44

IRMAA is based on two-year-old income, which means it can be unfair. A year when you received a large distribution, sold a business, or had a one-time income event can inflate premiums for two years even though your current income is much lower.

Medicare allows you to appeal IRMAA if you experienced a qualifying life-changing event that significantly reduced your income. Qualifying events include:⁵

• Retirement or stopping work
• Reduction in work hours
• Death of a spouse
• Marriage
• Divorce or annulment
• Loss of pension income
• Loss of income-producing property (through a disaster, not by choice)
• Receipt of employer settlement payment (such as retiree health benefits that ended)

To appeal, file SSA Form SSA-44 with your local Social Security office. You'll provide a more recent tax return or estimate of current-year income. If approved, Social Security recalculates your IRMAA using the more recent income year.

Appeals must be filed each year — the lower tier doesn't carry forward automatically. And note: not every income spike qualifies. Roth conversions done voluntarily, for example, are not a qualifying life-changing event, even if they temporarily boosted your MAGI. The qualifying events are specifically listed in law.

The planning problem

Managing IRMAA well requires projecting income across multiple years simultaneously: your RMD growth trajectory (which depends on portfolio returns), Social Security claiming timing, Roth conversion amounts, capital gain events, and the two-year lag between income and Medicare premiums. It's not complicated in principle — but doing it right means running numbers three to five years out, not just looking at this year's income.

That's the core of what a retirement-income specialist does. Not just "should I take a Roth conversion?" but "how large a conversion keeps me inside Tier 1, what does my RMD look like at 76 if I convert $40K this year, and what does that cost me in IRMAA at 78 if my portfolio grows 7%?" The interaction between tax planning, investment returns, withdrawal order, and Medicare premiums is exactly what a specialist advisor models over a multi-decade retirement.

Sources

1. CMS — 2026 Medicare Parts A & B Premiums and Deductibles. Base Part B premium $202.90/month. IRMAA tier 1 at $109,000 (single) / $218,000 (MFJ); Tier 4/5 at $689.90/month.
2. Kiplinger — 2026 IRMAA Brackets and Surcharges for Parts B and D. Full tier table for Part B ($284.10–$689.90) and Part D ($14.50–$91.00 monthly surcharges); income thresholds for all tiers.
3. IRS — QCD rules. QCD limit $111,000 per person in 2026 (inflation-adjusted annually under SECURE 2.0).
4. IRS — Retirement Topics: RMDs, QLAC rules. QLAC limit $200,000 per IRA owner; deferred income excluded from RMD base.
5. SSA Form SSA-44 — Medicare Income-Related Monthly Adjustment Amount Life-Changing Event. Lists qualifying life-changing events and procedure for requesting a lower IRMAA tier based on more recent income.

IRMAA brackets and premiums verified against 2026 CMS and SSA publications. Part B and Part D IRMAA surcharges are adjusted annually based on CPI; always confirm current-year figures at medicare.gov before planning.