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When you make significant withdrawals from your retirement plan, like withdrawing $95,000 in a single year, you can inadvertently push yourself into a higher tax bracket and trigger an increase in your Medicare premiums through the Income-Related Monthly Adjustment Amount (IRMAA). Here’s an in-depth look at how this happens and what you can do about it.
IRMAA isn’t something most people have to deal with, but it is familiar territory to financial advisors. You can use this free tool to match with a financial advisor if you have questions about IRMAA, Medicare or taxes in retirement.
IRMAA is an additional charge added to your Medicare Part B and Part D premiums based on your Modified Adjusted Gross Income (MAGI). Your MAGI includes income from various sources, such as retirement account withdrawals, which can lead to higher premiums if it exceeds certain thresholds.
Example:
-
Withdrawal Amount: $95,000
-
Previous MAGI: Let’s say it was $80,000, which didn’t require an IRMAA surcharge.
-
New MAGI: After the withdrawal, your MAGI for the year increases to $175,000.
-
Impact: For 2025, based on your 2023 income, you might find yourself in an IRMAA bracket where, for example, your Part B premium could increase from $185.00 to $285.00 per month, and your Part D premium might go up from $30.00 to $70.00 per month.
This increase is not based on current income but rather on the MAGI from two years prior, which means the effect of your withdrawal shows up in your Medicare premiums with a two-year lag.
No, the increase in Medicare premiums due to IRMAA is not permanent. It is based on your MAGI from two years earlier, so if your income drops in subsequent years, your IRMAA adjustments will reflect that. A financial advisor can help you determine your tax burdens and Medicare premiums. You can also reference the tables below to estimate your own Medicare premiums.
Single Filers:
|
MAGI (2022) |
Part B Premium |
Part D Premium Adjustment |
|---|---|---|
|
$103,000 or less |
$174.70 |
$0.00 |
|
$103,001 – $129,000 |
$244.60 |
$12.90 |
|
$129,001 – $161,000 |
$349.40 |
$33.30 |
|
$161,001 – $193,000 |
$454.20 |
$53.80 |
|
$193,001 – $500,000 |
$559.00 |
$74.20 |
|
$500,001+ |
$594.00 |
$81.00 |
Married Filing Jointly:
|
MAGI (2022) |
Part B Premium |
Part D Premium Adjustment |
|---|---|---|
|
$206,000 or less |
$174.70 |
$0.00 |
|
$206,001 – $258,000 |
$244.60 |
$12.90 |
|
$258,001 – $322,000 |
$349.40 |
$33.30 |
|
$322,001 – $386,000 |
$454.20 |
$53.80 |
|
$386,001 – $750,000 |
$559.00 |
$74.20 |
|
$750,001+ |
$594.00 |
$81.00 |
Single Filers:
|
MAGI (2023) |
Part B Premium |
Part D Premium Adjustment |
|---|---|---|
|
$106,000 or less |
$185.00 |
$0.00 |
|
$106,001 – $130,000 |
$259.00 |
$12.90 |
|
$130,001 – $161,000 |
$369.10 |
$33.30 |
|
$161,001 – $193,000 |
$479.20 |
$53.80 |
|
$193,001 – $500,000 |
$589.30 |
$74.20 |
|
$500,001+ |
$628.90 |
$81.00 |
Married Filing Jointly:
|
MAGI (2023) |
Part B Premium |
Part D Premium Adjustment |
|---|---|---|
|
$212,000 or less |
$185.00 |
$0.00 |
|
$212,001 – $260,000 |
$259.00 |
$12.90 |
|
$260,001 – $322,000 |
$369.10 |
$33.30 |
|
$322,001 – $386,000 |
$479.20 |
$53.80 |
|
$386,001 – $750,000 |
$589.30 |
$74.20 |
|
$750,001+ |
$628.90 |
$81.00 |
Knowing this, you should remember that Medicare premiums, including IRMAA, are re-evaluated every year. If your income decreases, your premiums can revert to lower levels in future years. Otherwise, if you experience a significant life event that reduces your income or if you believe your IRMAA determination was incorrect, you can appeal using Form SSA-44. Life events could include retirement, the death of a spouse, divorce, or loss of income-producing property.
