Written by Stina Antonopoulos

Founder of Roots & Wealth | Retirement Income Planning | Author of What If?

What Is IRMAA?

Many retirees believe Medicare premiums are the same for everyone.

They're not.

If your income exceeds certain IRS thresholds, you may pay more for Medicare Part B and Part D through what's called an Income-Related Monthly Adjustment Amount (IRMAA).

It's essentially an income-based surcharge added to your Medicare premiums.

How IRMAA Works

Each year, Medicare reviews your tax return from two years earlier.

If your modified adjusted gross income exceeds the annual limits established by Medicare, additional premiums may apply.

This means retirement income decisions you make today could affect what you pay for Medicare in future years.

What Income Counts?

IRMAA generally considers your Modified Adjusted Gross Income (MAGI), which can include:

IRA withdrawals

Traditional 401(k) distributions

Pension income

Interest

Dividends

Capital gains

Rental income

Taxable Social Security benefits

Even a one-time event, such as selling appreciated investments or converting a large amount to a Roth IRA, may temporarily increase your Medicare premiums.

Why It Matters

Many retirees focus on reducing income taxes.

Far fewer realize those same income decisions can also affect Medicare costs.

Good retirement planning coordinates both.

The goal isn't simply to pay less tax today.

It's to maximize the income you keep over your lifetime.

Strategies That May Help

Every situation is different, but strategies sometimes considered include:

Coordinating retirement account withdrawals

Gradual Roth conversions rather than large one-time conversions

Timing capital gains

Managing Required Minimum Distributions

Diversifying retirement income among taxable, tax-deferred, and tax-free accounts

These strategies should always be evaluated based on your complete financial picture and, when appropriate, with guidance from your tax professional.

The Bigger Picture

IRMAA isn't a penalty.

It's simply part of how Medicare determines premiums for higher-income retirees.

Understanding how retirement income affects taxes, Social Security, and Medicare can help you make more informed decisions and avoid unexpected costs.

How Roots & Wealth Group Can Help

At Roots & Wealth Group, we believe retirement planning starts with understanding your income—not just your investments.

Whether you already have a pension, are considering an annuity, or are looking for ways to create dependable retirement income, we can help you evaluate how different income sources fit into your overall retirement plan.

Our goal is to help you build a retirement strategy that reflects your lifestyle, priorities, and long-term financial goals.