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A Roth conversion can reduce future Required Minimum Distributions and create tax-free retirement assets. It can also increase Medicare premiums. Both statements can be true at the same time.
Medicare’s income-related monthly adjustment amount, commonly called IRMAA, is an additional charge applied to Part B and Part D premiums for beneficiaries whose income exceeds specified thresholds. A conversion increases modified adjusted gross income for the year completed. That increase may cause one or both spouses to cross an IRMAA threshold two years later.
This creates a planning tension. Some retirees avoid a conversion solely because it would trigger IRMAA. Others ignore IRMAA and are surprised by the premium increase. Neither extreme is sound. IRMAA should be treated as one component of the conversion’s total cost and compared with the projected lifetime benefit.
For Medicare purposes, modified adjusted gross income is generally adjusted gross income plus tax-exempt interest. Social Security typically uses the most recent federal tax return provided by the IRS. For 2026 premiums, the agency generally looks to the 2024 tax return filed in 2025. This is commonly described as a two-year lookback.
The adjustment applies separately to Part B and Part D. The Part B amount is added to the standard premium. The Part D adjustment is added to the beneficiary’s own prescription-drug plan premium. Married couples can incur the adjustment for both spouses, so a threshold crossing may affect two Part B premiums and two Part D adjustments.
IRMAA is based on cliffs rather than gradual phase-ins. One dollar above a threshold can move the beneficiary into the next premium tier for the year. That cliff structure makes year-end income estimates important.
The following table reflects 2026 amounts for individual filers and married couples filing jointly. Because the thresholds and premiums change, the current year’s figures should always be verified before implementation.
2024 MAGI used for 2026 premiums | 2026 Part B monthly premium | 2026 Part D monthly adjustment |
Individual ≤ $109,000 | $202.90 standard premium | Plan premium only |
Individual > $109,000–$137,000 | $284.10 | + $14.50 |
Individual > $137,000–$171,000 | $405.80 | + $37.50 |
Individual > $171,000–$205,000 | $527.50 | + $60.40 |
Individual > $205,000–<$500,000 | $649.20 | + $83.30 |
Individual ≥ $500,000 | $689.90 | + $91.00 |
Source: Social Security Administration. Amounts shown are for 2026 and should be updated for future publication years.
The table shows why a threshold crossing can be expensive, particularly for a married couple. However, the extra premium should be annualized and viewed in context. A conversion that creates several thousand dollars of additional Medicare cost may still produce substantially greater projected tax savings over the household’s lifetime. Conversely, a small conversion that barely reduces future RMDs may not justify the premium increase.
Assume a married couple on Medicare expects 2026-lookback MAGI of $215,000 before a conversion. A $20,000 Roth conversion would raise MAGI to approximately $235,000, placing the couple above the first 2026 joint threshold of $218,000 if those amounts were used for the applicable lookback year.
The conversion would create ordinary income tax in the conversion year and could cause both spouses to pay the first-tier Part B and Part D adjustments in the premium year. The true conversion cost is therefore:
That does not settle the decision. The analysis must then estimate the benefits: reduced future RMDs, more tax-free assets, improved survivor planning, and potentially lower future IRMAA because the traditional IRA is smaller.
Retirees sometimes describe IRMAA as a tax cliff that must never be crossed. That framing can lead to poor lifetime decisions.
Suppose crossing the first threshold costs a couple several thousand dollars in additional premiums for one year, but converting reduces projected lifetime taxes by tens of thousands of dollars and materially lowers the surviving spouse’s future income. Refusing the conversion to avoid IRMAA would save a visible short-term cost while preserving a larger long-term problem.
The reverse can also occur. If the conversion is small, the future tax benefit is uncertain, or the household is already likely to return to a lower bracket, the IRMAA cost may tip the decision against converting.
The correct question is not, “Will this trigger IRMAA?” The correct question is, “What is the all-in marginal cost of the conversion, and is the expected long-term benefit greater?”
Roth conversions are rarely the only item affecting MAGI. Retirees may also have:
A conversion amount should be calculated after these items are projected. A household that appears to have $30,000 of room below an IRMAA threshold may discover that a mutual fund’s year-end capital-gain distribution or an unplanned asset sale consumes part of that room.
This is one reason we prefer a staged conversion process. An initial conversion can be completed earlier in the year, followed by a final calculation after income becomes clearer.
IRMAA planning should begin before Medicare enrollment. A conversion at age 63 may affect premiums at age 65 because of the lookback. Retirees who wait until Medicare begins to consider the issue may already have created the relevant income.
That does not mean conversions should stop at 63. It means the cost should be forecast. In some cases, the years before Medicare are still the best conversion years even after the future premium effect is included. In other cases, conversions are accelerated at ages 60 through 62 and reduced in the later lookback years.
People under 65 may face a different income-sensitive issue: eligibility for health-insurance premium assistance. A conversion can increase household income and reduce or eliminate assistance. That cost can be larger than IRMAA and should be modeled separately.
Social Security allows a beneficiary to request a new IRMAA determination after certain life-changing events, including marriage, divorce, death of a spouse, work stoppage, or work reduction. Form SSA-44 is commonly used for this process.
A planned Roth conversion is not itself a qualifying life-changing event. Retirement may qualify as work stoppage, but the conversion income still exists and generally belongs in the estimate of current-year income. The appeal process should not be treated as a method for erasing conversion income.
An appeal may be appropriate when the agency is using an older, higher-income tax return that no longer reflects the beneficiary’s situation. Documentation and current income estimates are required, and Social Security makes the determination.
This is the most intuitive approach. The conversion is sized to preserve a buffer below the threshold for unexpected dividends, gains, or income. It is useful when the projected conversion benefit is modest and the household values premium stability.
Once a household is already inside a tier, additional income may not increase Medicare premiums until the next threshold is crossed. The marginal conversion cost within the tier may therefore be lower than the cost of the first dollar that entered it. This can create a rational “fill the tier” strategy, subject to tax brackets and other interactions.
A household may choose to pay the additional premium because a larger conversion materially improves lifetime taxes or estate outcomes. The decision should be explicit, quantified, and communicated so the premium notice is not a surprise.
Some retirees complete larger conversions in selected years and smaller or no conversions in others. This may produce IRMAA in certain premium years while preserving lower premiums in others. Whether this works better than steady annual conversions depends on the tax brackets, growth assumptions, and future RMDs.
The most frequent mistakes include using taxable income instead of MAGI, forgetting tax-exempt interest, ignoring the two-year lag, analyzing only one spouse’s premium, treating thresholds as gradual phase-outs, and failing to leave a buffer for year-end income.
Another mistake is optimizing IRMAA without optimizing taxes. A retiree may keep MAGI one dollar below a threshold every year while allowing a large traditional IRA to compound into much larger RMDs. The plan looks efficient annually but performs poorly over a lifetime.
IRMAA is commonly described by its monthly amount, but conversion decisions should use the annual household cost. For a married couple, calculate the Part B adjustment for each spouse, the Part D adjustment for each spouse, and the number of months the adjustment is expected to apply. Then compare that amount with the incremental conversion and its projected benefit.
For example, assume a conversion pushes both spouses into the first IRMAA tier for a full year. Using 2026 amounts, the Part B adjustment is $81.20 per month per person and the Part D adjustment is $14.50 per month per person. The combined annual household adjustment is approximately $2,296.80, before considering any other effects. That cost is real and should be included in the analysis. It is not the same as saying the entire conversion was taxed at an additional $2,296.80 rate forever.
If a $100,000 conversion is projected to save $20,000 of lifetime tax, reduce future IRMAA exposure, and improve survivor planning, the temporary premium cost may be acceptable. If a $10,000 conversion produces little projected benefit, the same threshold crossing may be inefficient.
IRMAA requires tracking two different calendars:
A conversion plan for 2026 should therefore show potential Medicare effects in 2028, based on rules and thresholds that are not yet final. The analysis can estimate those future amounts, but it should not pretend that today’s thresholds will remain unchanged.
This two-calendar view is especially important for couples approaching Medicare at different times. A conversion may affect one spouse’s premium before the other spouse enrolls. Later conversions may affect both. The household cost should be calculated year by year rather than assuming every conversion has the same Medicare impact.
Year-end capital-gain distributions, bond interest, a property sale, deferred compensation, or a larger-than-expected RMD can push MAGI above the planned amount. A conversion target set exactly one dollar below a threshold is fragile.
The size of the buffer depends on the predictability of income. A retiree with only Social Security, a fixed pension, and stable bank interest may need a modest buffer. A business owner, landlord, or investor holding actively managed mutual funds may need more.
It can also be rational to avoid the buffer and intentionally enter the next tier. Once the threshold is crossed, there may be room for additional conversion income before the following tier creates another Medicare increase. This is why the decision should compare several conversion amounts, not merely “below IRMAA” and “above IRMAA.”
IRMAA can become more difficult for a surviving spouse. Household income may decline, but the survivor generally files as single and faces lower thresholds. The survivor may also retain most of the traditional IRA and continue receiving pensions, investment income, and RMDs.
A conversion that creates IRMAA while both spouses are alive may reduce the survivor’s future exposure. This should be modeled explicitly. Focusing only on the couple’s current premium can preserve a larger long-term problem for the survivor.
When Social Security sends an IRMAA notice, compare the MAGI and tax year shown with the filed return. If the agency used older information or the return was amended, the beneficiary may need to provide updated documentation. If a qualifying life-changing event reduced income, Form SSA-44 may be appropriate.
The financial advisor, tax professional, and client should know which conversions caused which premium years. A simple annual record prevents confusion and makes future appeals or corrections easier.
IRMAA belongs in the conversion calculation, but it should not control the entire retirement plan. The premium adjustment is measurable. Future tax rates and investment returns are uncertain. A disciplined analysis uses the measurable cost, tests reasonable future scenarios, and avoids pretending that any one threshold is sacred.
The goal is to coordinate Medicare, taxes, income, and investments so one decision does not unintentionally damage another part of the plan. A well-designed Roth conversion may avoid IRMAA, fill an existing tier, or intentionally trigger a higher tier. What matters is that the decision is made with full knowledge of the cost and the expected benefit.
In one sentence: the conversion amount and timing should improve the whole financial plan.
The right plan may avoid a tier, fill a tier, or cross a tier deliberately.
Sources
Primary references reviewed for this article:
Important Disclosure
This material is for general educational purposes only and is not individualized investment, legal, accounting, Social Security, or tax advice. Rules change and the appropriate strategy depends on each household’s facts. Statera Wealth Management is not a law firm or accounting firm. Consult qualified tax and legal professionals before acting. Investing involves risk, including possible loss of principal. Hypothetical examples are illustrative and do not represent actual results.
