Medicare IRMAA Planning for High-Net-Worth Retirees

At $5M+ investable assets, your retirement income — Roth conversions, dividends, capital gains, RMDs — will almost certainly trigger Medicare's Income-Related Monthly Adjustment Amount (IRMAA). At the top tier, IRMAA adds $13,872/year above the standard premium for a couple. Worse, the structure is a cliff: a single dollar over a threshold triggers the full surcharge for the entire year. Modeling IRMAA alongside your Roth conversion schedule and income timing is a core retirement planning task, not an afterthought.

How IRMAA works

IRMAA is a Medicare surcharge that applies to Part B (medical insurance) and Part D (prescription drug) premiums for higher-income beneficiaries. Three things to know:

• Two-year lookback. Your 2026 Medicare premiums are based on your 2024 MAGI (Modified Adjusted Gross Income), as reported on your 2024 federal tax return. A large Roth conversion or asset sale in 2024 shows up in your 2026 premium — not immediately. This lag creates planning opportunity but also a future liability to track two years forward.
• Cliff structure, not phase-in. Unlike tax brackets, IRMAA thresholds are binary: if your MAGI lands $1 above a tier threshold, the full surcharge for that tier applies for all 12 months. There is no blending between tiers.
• Per-enrollee surcharge. Both spouses on Medicare pay the surcharge independently. A couple at the top tier pays the surcharge twice, per Part B and per Part D plan.

2026 IRMAA brackets

All amounts below reflect 2026 premiums determined by 2024 MAGI.¹ Thresholds are inflation-adjusted annually except the top bracket (fixed at $500,000 single / $750,000 MFJ by statute).

"Annual extra" = surcharge above standard for two Medicare enrollees, Part B + Part D combined, annualized. Base Part D plan premium varies by plan and is not included.

IRMAA cost calculator

Enter your estimated MAGI for the year two years before Medicare eligibility (e.g., 2024 income for 2026 IRMAA). The calculator shows your tier, annual premium cost, and the income reduction needed to drop one tier.

The cliff math: why $1 of income costs thousands

The most important IRMAA planning insight: thresholds are cliffs, not slopes. Consider a couple with 2024 MAGI of exactly $274,001 (MFJ) — just $1 over the Tier 1 upper bound.

• At $274,000 (Tier 1): Part B $284.10/mo each + Part D +$14.50/mo each → $5,970/yr for both → $1,101 extra vs standard
• At $274,001 (Tier 2): Part B $405.80/mo each + Part D +$37.50/mo each → $10,639/yr for both → $5,770 extra vs standard
• Cost of that $1: $4,669 in additional Medicare premiums for the year.

The same dynamic exists at every threshold. Being $50,000 under a cliff is equivalent to being $1 under it — and being $50,000 over a cliff is no worse than being $1 over it. Planning concentrates on the margin near each threshold.

Five strategies to reduce IRMAA exposure

1. Pace Roth conversions around IRMAA thresholds

Roth conversions add directly to MAGI in the year of conversion. A $200,000 conversion in 2024 lifts your 2026 IRMAA bracket accordingly. The solution isn't to skip conversions — it's to size them to land below a threshold. If your ordinary income without conversion puts you at $250,000 MFJ, a conversion of up to $23,999 keeps you in Tier 1 ($274K ceiling). Converting $24,001 pushes you into Tier 2 for 12 months. See the full Roth conversion strategy guide for the bracket-fill approach.

2. Use Qualified Charitable Distributions (QCDs) to reduce MAGI

For IRA owners age 70½ or older, a Qualified Charitable Distribution allows up to $111,000/year (2026)² to be transferred directly from a traditional IRA to a qualifying charity. The distribution counts toward your RMD but is excluded from MAGI entirely — unlike a withdrawal followed by a charitable deduction, which affects your MAGI and then only offsets taxes if you itemize. For a couple each doing $111K QCDs, that's $222K/year in MAGI reduction, which can move you one or two IRMAA tiers down.

3. Time capital gains recognition

Realized capital gains add to MAGI. Tax-loss harvesting in a high-income year can offset gains and keep you below a threshold. If you plan to sell appreciated securities, consider which year's MAGI matters — the gains flow to the IRMAA determination two years forward. If 2024 is shaping up to be a high-MAGI year (due to a business sale, large conversion, or significant dividend year), delay discretionary gain recognition to 2025 where possible. Direct indexing with systematic harvesting is the institutional approach for managing this at scale.

4. Maximize pre-tax retirement contributions

If you're still working, traditional 401(k) and IRA contributions reduce AGI and therefore MAGI. For 2026: $24,500 base deferral limit, $8,000 catch-up at 50+, $11,250 super catch-up at ages 60–63 (SECURE 2.0).³ A couple both contributing at the super catch-up rate can reduce joint MAGI by $47,500+ through this channel alone, potentially dropping a full IRMAA tier.

5. Appeal with SSA Form SSA-44 for life-changing events

IRMAA's 2-year lookback creates a timing problem: if you had high 2024 income (from a business sale, final year of W-2, or large Roth conversion) but then retired or income dropped sharply in 2025, your 2026 IRMAA is based on the high-income year — even though your current income is much lower.

The Social Security Administration's Form SSA-44 (Medicare Income-Related Monthly Adjustment Amount — Life-Changing Event) allows you to request that SSA use a more recent tax year if you've experienced a qualifying event:⁴

• Marriage, divorce, or death of a spouse
• Work stoppage or reduction (retirement qualifies)
• Loss or reduction of pension income
• Loss of income from income-producing property

For an HNW retiree who retired in 2025 and has $200K/yr in retirement income vs $600K/yr in 2024 peak earnings, an SSA-44 appeal using 2025 income can eliminate 2-3 IRMAA tiers immediately — worth several thousand dollars per year per enrollee.

Integrating IRMAA into your retirement income plan

The challenge is that IRMAA doesn't live in isolation. A $100,000 Roth conversion affects your tax bracket, your IRMAA tier two years forward, and potentially the taxable portion of your Social Security benefit — all simultaneously. Fee-only advisors who specialize in HNW retirement income planning model these interactions as a system, not individually, using multi-year projections that optimize across:

• Roth conversion sizing (by year) to fill tax brackets without crossing IRMAA cliffs
• QCD timing to reduce RMD-driven MAGI before it creates IRMAA liability
• Capital gains realization sequencing across years
• Social Security timing to minimize the combined tax and IRMAA impact
• SSA-44 eligibility assessment when a life-changing event occurs