Even disciplined investors can unknowingly trigger higher Medicare costs. If you’re retired (or approaching retirement) with a sizable IRA or taxable portfolio, one “normal” financial move, like a large IRA withdrawal or Roth conversion, can quietly raise your Medicare premiums.
In some cases, that can mean meaningful added costs over the course of a year. That’s where a complimentary IRMAA calculator may help.
It’s designed to help you understand how income, withdrawals, and certain investment decisions may affect Medicare premiums and to highlight planning approaches you may want to discuss with your advisor and tax professional.
Medicare Premiums Aren’t Fixed: Meet IRMAA
Many retirees assume Medicare premiums are set in stone. In reality, Medicare Part B and Part D premiums can increase based on your income due to the Income-Related Monthly Adjustment Amount (IRMAA).
IRMAA is an additional monthly charge added to your Medicare premiums when your income exceeds specific thresholds.
And here’s the part that surprises people: IRMAA can be triggered even if your “lifestyle” income hasn’t changed simply because your taxable income spikes for one year.
The Common IRA “Gotchas” That Trigger Higher Premiums
Retirees with significant retirement assets often run into IRMAA because certain events can temporarily push income above the thresholds.
Common examples include:
- A one-time large IRA distribution (for a purchase, tax payment, or big expense)
- Roth conversions (often a smart long-term strategy—yet potentially costly short-term)
- Capital gains from rebalancing or selling concentrated positions
- Required Minimum Distributions (RMDs) that start and steadily increase taxable income
- Unexpected spikes from dividends, interest, or bond income in taxable accounts
In other words: you can do everything “right” and still face higher premiums if income isn’t coordinated across taxes, withdrawals, and portfolio design.
Why This Matters
IRMAA is not based on what you earn this year. It is generally based on your Modified Adjusted Gross Income (MAGI) from two years prior, using the tax return Social Security has on file.
That timing disconnect means:
- You may not realize an income event will affect premiums until later, and…
- You may receive an IRMAA notice after the income event has already happened, when it’s harder to adjust.
This is why proactive planning—before large withdrawals, conversions, or RMDs—can be so valuable.
How Moran Wealth’s IRMAA Impact Review Helps
Our complimentary IRMAA calculator identifies key income drivers that may raise Medicare costs and discusses potential strategies that may help manage IRMAA exposure.
Your review helps clarify:
- How your current and projected income aligns with IRMAA thresholds
- Whether upcoming RMDs could push you into higher premium tiers
- Methods to help smooth income, including Roth conversions and Qualified Charitable Distributions (QCDs)
- How investment positioning may influence future taxable income and Medicare premiums
The goal isn’t to avoid taxes at all costs—it’s to help reduce the chance that your withdrawal and investment strategy creates unnecessary Medicare surcharges.
Planning Opportunities to Consider
While every situation is unique, Medicare-aware retirement planning often focuses on a few themes:
- Smoothing income over time: Instead of “lumpy” years that can cause premium spikes, a structured withdrawal plan may help manage IRMAA exposure.
- Coordinating Roth conversions strategically: Roth conversions can be powerful—but the “when” and “how much” matter. A conversion that’s beneficial from a tax perspective can still increase Medicare premiums if not modeled carefully.
- Using QCDs to manage taxable income: For charitably inclined retirees, QCDs can be an efficient way to support causes you care about while also managing taxable income.
- Positioning investments with future taxes in mind: The way assets are allocated across IRA, Roth, and taxable accounts can impact future taxable income and therefore future Medicare premiums.
Tax Rules May Change After 2025
Many individual tax provisions from the Tax Cuts and Jobs Act are scheduled to sunset after 2025 under current law. If tax rules change and taxable income rises in certain years, it may increase the likelihood of crossing an IRMAA threshold—even for retirees who aren’t dramatically changing spending.
Planning ahead, before potential tax changes take effect, may help preserve flexibility and reduce the likelihood of unexpected Medicare premium surcharges later.
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- Julie Rich, CFP® — Senior Vice President
Click here to calculate your Medicare Income-Related Monthly Adjustment Amount
This information is for educational purposes only and does not constitute tax or legal advice. Medicare rules, IRMAA thresholds, and tax laws are subject to change. Please consult your tax professional regarding your specific situation.