Roth Conversions and IRMAA: The Medicare Premium Cliff Most Retirees Miss

A Roth conversion counts as ordinary income in your modified adjusted gross income (MAGI), and Medicare sets your Part B and Part D premiums using MAGI from two years prior. Convert past an Income-Related Monthly Adjustment Amount (IRMAA) threshold and the surcharge hits as a cliff: a small overage drops you into the next tier and can add thousands of dollars a year to a couple's premiums, billed two years later.

What IRMAA Is and Why the Lag Catches People

IRMAA is a surcharge on Medicare Part B and Part D premiums when income exceeds set thresholds. It is a form of means-testing.

The timing is what trips retirees up. Medicare looks at your MAGI from two years prior. Retire at 63, convert a large chunk of your individual retirement account (IRA) in 2026, enroll in Medicare at 65, and the 2026 conversion shows up in your 2028 premiums, long after most people have forgotten it.

The Tiers and the Real Dollar Exposure

For 2026, the standard Part B premium is $202.90 per month. The 2026 IRMAA tiers (based on 2024 MAGI) look like this, with single and married filing jointly thresholds and the total Part B premium per person:

• Standard: MAGI up to $109,000 single / $218,000 joint, $202.90/month
• Tier 1: up to $137,000 / $274,000, $284.10/month (adds $81.20)
• Tier 2: up to $171,000 / $342,000, $405.80/month (adds $202.90)
• Tier 3: up to $205,000 / $410,000, $527.50/month (adds $324.60)
• Tier 4: under $500,000 / $750,000, $649.20/month (adds $446.30)
• Tier 5: $500,000 / $750,000 and above, $689.90/month (adds $487.00)

Each tier also carries a separate Part D surcharge, set each year by the Centers for Medicare and Medicaid Services (CMS). For married filing jointly, combined MAGI sets the tier for both spouses.

These thresholds work as cliffs. A single filer whose conversion pushes MAGI from $136,500 to $137,500, a $1,000 overage, pays an extra $121.70 per month for Part B, or about $1,460 for the year. Landing at $137,001 would cost the same: one dollar over is enough.

A Worked Example: The $40K Conversion That Cost More Than It Should

Consider a hypothetical married couple, both 66, with combined MAGI of $250,000 in 2026 before any conversion. That already places their 2028 premiums in Tier 1. A $40,000 Roth conversion lifts MAGI to $290,000 and into Tier 2. Using 2026 premium amounts, that jump adds $121.70 per month per person for Part B, or about $2,920 for the couple over the year, plus a higher Part D surcharge for each of them. The surcharge applies for one premium year; the next year's tier is set by the next year's MAGI.

The alternative is sequencing. Splitting the $40,000 into two years of $20,000 keeps them inside Tier 1 (which runs to $274,000 for joint filers), assuming base MAGI stays near $250,000. The IRA still shrinks and future required minimum distributions (RMDs) still fall, but the IRMAA exposure never moves. The full bracket math, 5-year rule, and Affordable Care Act (ACA) premium interactions are covered in the parent piece, Roth Conversion: A Practical Guide for High Earners and Pre-Retirees.

How This Fits Your Tax Plan

IRMAA is a tax planning problem, which is why it gets planned before the year ends. The work is precise: convert just enough to reduce the long-term tax burden without triggering a premium cliff that erodes the near-term benefit. A conversion that saves $2,000 in future income taxes but triggers $2,920 in extra Part B premiums leaves the household about $920 behind before counting Part D.

Frequently Asked Questions

Does a Roth conversion always count toward IRMAA?

Yes. A conversion is treated as ordinary income in the year you convert, so it is included in MAGI with no exclusion.

Can I appeal an IRMAA surcharge caused by a Roth conversion?

Generally no. Form SSA-44 appeals cover qualifying life events like retirement, divorce, or the death of a spouse, and they exclude voluntary transactions such as a conversion.

Do Roth IRA distributions in retirement count toward IRMAA?

No. Qualified Roth distributions are excluded from MAGI, which is a core long-term benefit of converting: future withdrawals never push you into higher tiers.

Does IRMAA affect both spouses even if only one converts?

Yes. Married filing jointly uses combined MAGI, so one spouse's conversion can trigger surcharges for both.

What to Do Next

What decides this for you. Whether you are within two years of Medicare. The surcharge is assessed on income from two years prior, so a conversion at 63 sets your premium at 65, long after the decision can be revisited.

Where it goes wrong. People treat it as a phase-in and it is a cliff. One dollar over a threshold moves you into the full tier for the entire year, for both Part B and Part D, for both spouses. And recharacterization of conversions was eliminated, so unlike the old rules there is no undoing it once the year closes. A conversion sized without checking the thresholds can cost thousands in premiums that were never part of the calculation, and the bill arrives two years later when the connection is no longer obvious.

Worth a conversation if you are 61 or older and converting, or the amount you have in mind lands anywhere near a threshold. Sizing a conversion to stop just under a cliff, and spreading the rest across additional years, can keep the next tier's surcharge off the bill. See if we're a fit.

The information provided is for educational purposes only and does not constitute investment, legal, or tax advice. Tax law changes frequently, so verify current rules before acting. Consult with qualified professionals for guidance specific to your situation.