Guide
Medicare IRMAA and conversions
Medicare looks at the income you reported two years ago. That single design choice means a conversion made at 63 sets the premium you pay at 65 — and by the time you see the bill, the decision is two years old.
By The Roth Ladder · Published
Written against published statutory sources. Not a CPA or financial adviser — every formula is documented so you can check it.
This page has no dollar thresholds, on purpose
CMS resets the IRMAA brackets every year, so a figure written into this prose would be a number with nothing generating it and nothing checking it. What follows is the mechanism, which is stable and is the part that changes a decision. For the current thresholds and surcharge amounts, go toMedicare.gov or the annual CMS premium notice.
The two-year lookback
Medicare Part B and Part D premiums are income-adjusted, and the income they use is your modified adjusted gross income from two tax years earlier. The Social Security Administration gets it from the IRS, which means the figure setting your premium is a return you filed roughly eighteen months before the premium starts.
| Tax year you convert | Your age that year | Premium year it sets | Your age then |
|---|---|---|---|
| 2026 | 63 | 2028 | 65 |
| 2027 | 64 | 2029 | 66 |
| 2028 | 65 | 2030 | 67 |
Read the first row carefully, because it is the whole planning point: age 63 is the first year a conversion touches Medicare. Convert at 62 and there is no IRMAA consequence whatsoever. Convert at 63 and you have set your premium for your first year of coverage, before you have enrolled or seen a single premium quote.
Why it behaves like the subsidy cliff
IRMAA is not a rate applied to income above a threshold. It is a flat dollar surcharge per tier. Cross a threshold by one dollar and you owe the entire tier's surcharge, every month, for twelve months.
Three things make that worse than it first sounds:
- It applies per person. A married couple both enrolled in Medicare each pay the surcharge, so the household cost is double the published figure.
- It hits Part B and Part D separately. Two surcharges, one income test.
- There are several tiers. A large conversion can cross more than one, and each crossing is its own cliff.
This is structurally the same problem as the 400% FPL subsidy cliff — a discontinuous cost triggered by one dollar of income — and it deserves the same treatment: find the threshold, then stop short of it deliberately rather than discovering it afterwards.
What counts toward the income test
IRMAA uses adjusted gross income plus tax-exempt interest. That includes:
- Roth conversions — the taxable portion, in full
- Traditional IRA and 401(k) withdrawals, including required minimum distributions
- Capital gains, dividends, and interest
- Tax-exempt municipal bond interest — exempt from income tax, but counted here
- The taxable portion of Social Security benefits
- Pension and annuity income
What it does not include is a qualified Roth withdrawal. That is the long-run argument for converting: money already in a Roth produces no AGI when spent, so it cannot push you into a higher IRMAA tier in retirement. You are choosing to take the income hit in a year you select rather than in every year of retirement.
The genuine tension in ladder planning
A conversion ladder wants to convert as much as possible in low-income years. IRMAA wants those years to stay below a threshold from age 63 onward. Between roughly 63 and 65 these two goals point in opposite directions, and the resolution depends on which cost is larger.
For most people it is not close. A single IRMAA tier is a fixed annual amount; the tax saved by converting at 12% instead of 22% on a bracket-sized conversion is usually several times that. The tier cost also applies for one year only, since the following year's premium is reset by that year's income. So a deliberate one-year IRMAA crossing to complete a large conversion can be a perfectly sound trade.
What is not sound is crossing by accident, or crossing every year without noticing. Compare the actual numbers rather than assuming either way.
The window most people miss
Between retiring and age 63 there is a stretch where neither IRMAA nor required minimum distributions apply, and — if you are not on a marketplace plan — no subsidy cliff either. That is the cheapest conversion space you will ever have. Retire at 50 and it is thirteen years long. Using it fully is worth more than optimizing the IRMAA years afterwards.
Sequencing that helps
- Front-load before 63. Convert aggressively in the years with no IRMAA consequence, so less conversion is needed in the years where there is one.
- Check the threshold before December. Conversions are irrevocable and cannot be made after December 31, so late in the year — when your other income is known — is when a conversion can be sized against a threshold precisely.
- Watch the RMD interaction. Required minimum distributions begin at 75 under SECURE 2.0 for anyone born in 1960 or later (73 for those born earlier). They are not optional income, so once they start they occupy IRMAA headroom permanently — which is the strongest argument for shrinking the pre-tax balance well before then.
- Remember municipal interest counts. Tax-free income that still raises your IRMAA determination catches people who moved into munis specifically to reduce taxable income.
Appeals
An IRMAA determination can be appealed using form SSA-44 when the increase results from a life-changing event: work stoppage or reduction, marriage, divorce, death of a spouse, loss of a pension, or loss of income-producing property. Retirement counts as work stoppage, and this is genuinely useful in the first year or two of retirement, when premiums are being set from your final high-earning years.
A Roth conversion does not qualify. It is voluntary income, so there is no relief for an IRMAA increase you chose to trigger. Plan it rather than appeal it.
What this calculator does not model
The calculator does not include IRMAA. It computes federal income tax and the ACA premium tax credit consequence of each conversion, and it stops there — the disclaimer names IRMAA as one of its stated omissions rather than leaving you to discover it.
For most of its audience that is the right boundary: early retirees converting in their 40s and 50s are well outside the two-year lookback window, and the binding constraint in those years is the subsidy cliff. If you are 63 or older, treat the ladder's marginal rate as a floor rather than the whole cost.
To price your own conversion against the thresholds, the IRMAA calculator computes the room before your next surcharge, what crossing costs across both Part B and Part D, and the federal tax on the same conversion.
Common questions
Do Roth conversions affect Medicare premiums?
Yes, with a two-year delay. Medicare Part B and Part D premiums are income-adjusted using your modified adjusted gross income from two years earlier, and a Roth conversion increases that MAGI. A conversion made at age 63 is the income figure used to set your premiums at 65, the year you enroll.
What is IRMAA?
IRMAA is the Income-Related Monthly Adjustment Amount: a surcharge added to Medicare Part B and Part D premiums for beneficiaries above certain income thresholds. It is not a percentage of income. It is a fixed dollar amount per tier, so crossing a threshold by one dollar costs the full surcharge for that tier for the entire year.
At what age do Roth conversions start affecting IRMAA?
Age 63 for most people. Medicare eligibility begins at 65 and the income test looks back two years, so the tax year you turn 63 is the first one that can raise your premiums. If you plan to enroll at 65, conversions made at 62 and earlier have no IRMAA consequence at all.
Is IRMAA a cliff or a phase-in?
A cliff, and that is what makes it dangerous for conversion planning. The surcharge is a flat amount per tier rather than a rate applied to the excess, so one dollar of additional income at a threshold triggers the entire tier increase for twelve months of premiums, for each enrolled spouse.
Can you appeal an IRMAA determination?
You can appeal if the increase resulted from a qualifying life-changing event: work stoppage or reduction, marriage, divorce, death of a spouse, loss of a pension, or loss of income-producing property. Retirement itself counts as work stoppage. A Roth conversion does not — it is voluntary income, so there is no relief available for an IRMAA increase you caused by converting.
Model your conversions · The other income cliff · Price the cliff exactly · What the model omits