Roth IRA Conversions Pose Medicare Premium Risk for Retirees

Apr 03, 2026 21:27 UTC

Long term

Retirees considering Roth IRA conversions to avoid required minimum distributions (RMDs) should be cautious about the potential impact on their Medicare premiums. Converting traditional IRA or 401(k) funds to a Roth account can boost modified adjusted gross income (MAGI), which is used to determine Medicare surcharges. These surcharges, known as income-related monthly adjustment amounts (IRMAAs), can add hundreds of dollars to monthly Medicare costs. For single tax-filers with a MAGI over $109,000 and joint filers with a MAGI over $218,000, the risk of higher premiums is significant. A common strategy is to perform Roth conversions in the 60s, before RMDs begin at age 73 or 75. However, converting large sums in a short period can push MAGI into higher brackets. For example, converting $200,000 annually from a $1 million traditional IRA could trigger IRMAAs. To mitigate this risk, spreading conversions over several years is advisable. The more time available for conversions, the lower the annual MAGI impact. Additionally, Medicare IRMAAs are based on MAGI from two years prior, meaning conversions at age 63 could affect Medicare costs starting at 65. Careful planning is essential to balance the benefits of Roth conversions with the potential for increased healthcare expenses.

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Roth IRA Conversions Pose Medicare Premium Risk for Retirees

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