How to Avoid the IRMAA Cliff: Roth Conversions and Smart Withdrawals

One dollar of extra income can trigger an IRMAA surcharge that costs you $838 or more in Medicare Part B and Part D premiums for the entire year. That is not a rounding error. It is a cliff, and falling off it is entirely avoidable with the right withdrawal sequencing.

What IRMAA Actually Is and How It Is Calculated

IRMAA stands for Income-Related Monthly Adjustment Amount. Medicare uses it to charge higher-income enrollees more for Part B and Part D coverage. The surcharge is based on your Modified Adjusted Gross Income (MAGI) from two years prior, so your 2026 premiums are based on your 2024 tax return.

For 2026, the standard Part B premium is $185.00 per month. Once your MAGI crosses the first threshold, that number jumps. There are five IRMAA tiers above the standard rate, and the brackets for 2026 are as follows for individual filers: $106,000 to $133,000 triggers a total monthly premium of $259.00; $133,000 to $167,000 pushes it to $370.00; $167,000 to $200,000 reaches $480.90; $200,000 to $500,000 hits $591.90; above $500,000 the premium reaches $664.90 per month. Married filing jointly thresholds are exactly double those figures.

The cliff is the gap between tiers. A single filer with $132,999 in MAGI pays $259.00 per month. At $133,001, that same person pays $370.00. One hundred dollars of extra income costs $1,332 in additional annual premiums for Part B alone. Add Part D surcharges on top and the penalty grows further.

What Income Counts Toward IRMAA

MAGI for IRMAA purposes includes wages, self-employment income, traditional IRA and 401(k) withdrawals, pension income, taxable Social Security benefits, capital gains, dividends, and interest. It also includes Roth conversions, because a conversion is a taxable event in the year it occurs.

What is excluded matters just as much. Roth IRA withdrawals that meet the qualified distribution rules do not count. Health Savings Account distributions used for qualified medical expenses do not count. Municipal bond interest does not count. Life insurance proceeds do not count. This exclusion list is the foundation of most IRMAA planning strategies.

How Roth Conversions Interact with the Cliff

Converting pre-tax retirement funds to a Roth account adds directly to your MAGI in the conversion year. Done without planning, a large conversion can push you over an IRMAA threshold and trigger a surcharge two years later. Done precisely, conversions reduce future required minimum distributions (RMDs) and future MAGI, lowering IRMAA exposure for years or decades ahead.

The strategy is bracket filling. You identify your current IRMAA tier and convert only enough to approach, but not cross, the next threshold. For a single filer sitting at $90,000 in MAGI, that means converting up to roughly $15,900 before hitting the first surcharge threshold. The converted amount grows tax-free inside the Roth, and future qualified withdrawals do not appear in your MAGI at all.

The math works best in the years between retirement and age 73, when RMDs begin. During that window, income often drops sharply, IRMAA risk is lower, and converting aggressively can shrink the pre-tax balance that will eventually generate forced, taxable RMDs. Smaller RMDs at 73 and beyond mean lower MAGI and lower IRMAA exposure for the rest of your life.

State income taxes affect this calculus significantly. A retiree in Florida or Texas pays no state income tax on a Roth conversion. A retiree in California or New York adds 9 to 13 percent state tax on top of federal rates for the same conversion. Our post on Best States for Retirees to Avoid Taxes breaks down exactly which states make Roth conversions cheapest, and our Capital Gains Tax by State breakdown covers how investment income compounds that picture.

Withdrawal Sequencing to Stay Below the Cliff

Roth conversions are one tool. Withdrawal sequencing is the other. In retirement, you typically have three buckets: taxable brokerage accounts, pre-tax retirement accounts, and Roth accounts. The order you draw from them determines your annual MAGI.

Drawing from Roth first in high-income years keeps MAGI low and protects IRMAA tier placement. Drawing from pre-tax accounts in low-income years fills brackets efficiently without crossing thresholds. Selling appreciated assets in taxable accounts when long-term capital gains rates are zero, which applies at incomes below $47,025 for single filers in 2026, generates income that does count toward MAGI but at no federal tax cost.

The goal is not to minimize withdrawals. The goal is to smooth MAGI across years so you never accidentally spike into the next IRMAA tier. Use our IRMAA and retirement income calculator to model your exact thresholds before making any withdrawal or conversion decision.

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Key Takeaways

• The 2026 first IRMAA threshold for single filers is $106,000 in MAGI. Crossing it adds $888 per year in Part B premiums alone.
• Qualified Roth IRA withdrawals are excluded from MAGI entirely. Roth conversions are not. Time conversions to the years before RMDs begin.
• State tax rates change the cost of every Roth conversion dollar. Retirees in zero-income-tax states convert at a roughly 10 to 13 percent lower effective cost than those in California or New York.

Compare your current state's full retirement tax burden against alternatives at Live or Die Here to see whether a move could reduce your IRMAA exposure before your next conversion window opens.