Retiree With $1.2 Million Discovers Roth Conversion Doubled His First Medicare Premium

Medicare's Income-Related Monthly Adjustment Amount (IRMAA) surcharge uses income from two years prior, so a Roth conversion at age 63 can directly double your first Medicare premium at age 65. For example, a $180,000 conversion added to modest income may push a single filer into the third IRMAA tier, raising Part B premiums from $203 to $406 monthly. Completing large conversions by age 62 avoids IRMAA entirely, as that income falls outside Medicare's two-year lookback window.

How IRMAA Works

Medicare's IRMAA uses modified adjusted gross income (MAGI) from two years prior to set the current year's Part B and Part D surcharges. When enrolling at age 65, Social Security reviews your tax return from age 63—often a year when pre-retirees perform aggressive Roth conversions to move money out of traditional IRAs before required minimum distributions (RMDs) begin.

A $180,000 conversion, combined with even modest interest, dividends, or part-time income, can push a single filer past the second IRMAA threshold. Surcharges increase at each threshold, and exceeding a limit by even one dollar triggers the next tier.

IRMAA Tiers for 2026 (Single Filers)

• MAGI at or below $109,000: Standard premium of $202.90 (no surcharge).
• MAGI between $109,000 and $137,000: Total premium of $284.10.
• MAGI between $137,000 and $171,000: Total premium of $405.80.
• MAGI between $171,000 and $205,000: Total premium of $527.50.
• MAGI between $205,000 and $500,000: Total premium of $649.20.

A $180,000 conversion added to a few thousand dollars in taxable interest typically lands in the third tier, resulting in a full-year surcharge of several thousand dollars for Part B and Part D combined.

Appeals and Limitations

The Social Security Administration allows appeals via Form SSA-44 for life-changing events such as retirement, marriage, divorce, death of a spouse, loss of pension, or work reduction. However, a Roth conversion is not considered a qualifying event, as it involves voluntary income.

Strategies to Avoid IRMAA Surcharges

• Complete conversions by age 62: Income from conversions in the year you turn 62 or earlier avoids IRMAA, as it falls outside Medicare's two-year lookback window. For example, a $1.2 million portfolio with a multi-year conversion plan could move six figures of taxable IRA money into a Roth without surcharge exposure.
• Size conversions to stay below IRMAA thresholds: From age 63 onward, limit conversions to stay just under IRMAA thresholds (e.g., $109,000 or $137,000 for single filers). The federal 24% tax bracket for single filers in 2026 extends up to $201,775, but the Medicare cliff occurs well below this limit.

In some cases, accepting a one-year surcharge may be worthwhile if it avoids future RMDs taxed at higher rates (e.g., 32% or 35%). The key is to calculate the cost before proceeding.

Action Steps for Pre-Retirees

If you are between ages 60 and 64 with a seven-figure traditional IRA, review your projected MAGI for the current year and compare it to the IRMAA threshold immediately above it. If a planned conversion would cross a threshold, explicitly calculate the surcharge and weigh it against the long-term benefits of a Roth conversion.