IRMAA Recovery Plan: How To Eliminate a $2,400 Medicare IRMAA Surcharge

Retirement planning is full of theory. But theory doesn’t pay the bills. Strategy does.

Today, you will see exactly how one retiree Jane, a 72-year-old retired teacher eliminated a $2,400 annual Medicare surcharge using 5 proven tax strategies. This isn’t a hypothetical. It is a blueprint you can copy, starting today.

Split image: Left, an older woman looks worried at a "surcharge" bill among paperwork; right, she smiles holding an "approved" document above a folder labeled "Plan. — IRMAA Rescue plan

Most retirees think Medicare premiums are fixed. They aren’t. That’s where the Michael Ryan Money Medicare IRMMA Recovery Plan comes in.

Jane thought she was doing everything right. She had a pension, Social Security, and a healthy IRA. Then she received her Initial Determination Notice from the Social Security Administration.

Because her income sources “stacked” on top of each other… Pension plus Social Security plus Required Minimum Distributions (RMDs). Her Modified Adjusted Gross Income (MAGI) spiked. She crossed the IRMAA surcharge cliff by just $1,500. That small overage triggered a penalty that cost her $2,400 a year.

She was paying a “success penalty” for saving in her Traditional IRA.

But Jane didn’t just pay it. We built a 5-step recovery plan to restore her base Medicare premium.

📊 Is Jane’s Scenario Similar to Yours?

Before diving into the fix, let’s diagnose your situation. Check all that apply:

[ ] I am age 65+ and enrolled in Medicare Part B (or will be within 2 years).
[ ] My MAGI is within $15,000 of an IRMAA income threshold.
[ ] I take Required Minimum Distributions (RMDs) or will start at age 73.
[ ] I have a pension or annuity income that stacks on my Social Security.
[ ] I experienced a Life-Changing Event (Retirement, Divorce, Death of Spouse) in the last 2 years.

The Verdict:

0-2 checked: Focus on prevention (Strategies 2-4).
3-4 checked: You are in Jane’s zone—read all five strategies.
5 checked: You are a perfect candidate for this recovery plan.

Key Takeaways Ahead

The “Income Stack” Trigger: Why Jane’s Numbers Collided

The root of the problem wasn’t that Jane was “too rich.” It was that her income sources collided on IRS Form 1040.

The Income Stack:

Pension: $45,000 (Fixed, taxable).
Social Security: $32,000 (85% taxable).
RMDs: $35,000 (Fully taxable withdrawal from Traditional IRA).

Total MAGI: ~$112,000.

For the projected 2026 tax year, the IRMAA surcharge threshold for a single filer kicks in at $109,000. Jane was $3,000 over the limit.

Here is the brutal math of the Medicare cliff: Because she exceeded the limit by $3,000, the Centers for Medicare & Medicaid Services (CMS) applied the full Tier 1 surcharge to every month of her premiums.

⚡ Jane’s Savings Snapshot: The ROI of Planning

Visualizing the financial impact of strategic planning is crucial to understanding IRMAA surcharges. The table below breaks down exactly how specific planning decisions reduced MAGI and eliminated unnecessary Medicare premiums, resulting in significant long-term savings.

*Estimates based on projected 2026 figures.
Item	Scenario A (No Plan)	Scenario B (Jane’s Plan)	Savings
Filing Status	Single	Single	N/A
MAGI	$112,000	$105,000	-$7,000
IRMAA Tier	Tier 1 Surcharge	Standard Base	Tier Drop
Part B Cost	$284.50/mo	$202.90/mo (est)	+$979/yr
Part D Cost	Plan + $13.70/mo	Plan Base	+$164/yr
Total 5-Year Savings	Paying Surcharge	Base Premium	+~$5,700+

To avoid overpaying like in comparison A, check your Modified Adjusted Gross Income (MAGI) against the latest 2026 brackets immediately to see if you are approaching a cliff.

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The 5-Step IRMAA Rescue Plan (Choose Your Weapon)

We didn’t accept the IRMAA surcharge. We engineered a way out for the following tax year (remember, Medicare premiums use a 2-year lookback period).

Which IRMAA Recovery Strategy Fits You?

Strategy 1 (QCD): You’re 70½+, charitable, and have an IRA.
Strategy 2 (Roth): You have 5+ years until RMDs or “room” in your tax bracket.
Strategy 3 (Pension Timing): You control your annuity start date.
Strategy 4 (Tax-Loss Harvesting): You have a taxable brokerage account with losses.
Strategy 5 (SSA-44): You had a Life-Changing Event (Retirement/Divorce).

Strategy 1: The QCD “Income Eraser”

Jane gives $3,000 annually to her church and the local animal shelter. Previously, she wrote checks from her bank account—using after-tax dollars that did nothing to lower her MAGI.

The Shift:
We switched the donor method to Qualified Charitable Distributions (QCDs). Jane, being age 72, is eligible. She now directs the IRA custodian to send that $3,000 directly to the charities.

The Math:
This transaction satisfies $3,000 of her Required Minimum Distribution without adding a single cent to her Adjusted Gross Income.

Result: MAGI dropped from $112,000 to $109,000. She was right on the line.

➡️ Deep Dive: Using QCDs to Lower IRMAA Exposure

Strategy 2: The Roth “RMD Shrinker”

We realized Jane had “room” in the 22% tax bracket before hitting the next surcharge tier.

The Strategy:
Instead of leaving money in her Traditional IRA to grow (and create larger future RMDs), we initiated micro-Roth conversions of $5,000 per year.

The Benefit:
Jane pays income tax on the conversion now, but this action permanently removes those assets from the RMD calculation. This stops the “RMD creep” that would otherwise push her into Tier 2 or Tier 3 later in retirement.

What if I’m already on Medicare?
You can still convert. Use a Roth conversion calculator to find the “sweet spot”—converting enough to reduce future RMDs without spiking your current premium.

Strategy 3: The Pension “Delay Valve”

Jane had the option to trigger a small secondary annuity payout she inherited.

The Move:
We delayed the start date by two years.

Why?
This kept her current income lower while we aggressively converted her IRA to Roth. By the time the annuity payments commenced, her RMDs were lower, ensuring the total “income stack” remained below the IRMAA surcharge threshold.

Strategy 4: The Tax-Loss “Offset”

Jane held a taxable brokerage account with bond funds that had lost value due to interest rate hikes.

The Harvest:
We sold the specific tax lots to realize a $3,000 capital loss.

The Deduction:
The IRS allows taxpayers to use up to $3,000 of net capital losses to offset ordinary income on Form 1040.

The Result:
This deduction directly lowered her MAGI by another $3,000. Now she was safely under the $109,000 cliff.

➡️ Learn How: Tax-Loss Harvesting for IRMAA Reduction

Strategy 5: The SSA-44 “Income Update” (The Immediate Fix)

Here is the critical nuance: Jane had fully retired from a part-time consulting gig early in the year. This qualifies as a Work Stoppage. One of the eight specific Life-Changing Events (LCEs) recognized by the SSA.

The Action:
We filed Form SSA-44 (Medicare Income-Related Monthly Adjustment Amount – Life-Changing Event) immediately.

The Argument:
“Please use my current, lower income to calculate my premium, rather than my tax return from two years ago.”

The Win:
The Social Security Administration approved the request. Her premiums dropped that same year, saving her money immediately rather than waiting for the 2-year lag.

Pro Tip: Always mail your SSA-44 via Certified Mail with Return Receipt. Local offices handle millions of documents; get a tracking number to prove you filed on time.

➡️ Step-by-Step: The Complete Form SSA-44 Guide

🔄 Checkpoint: Can You Combine These Strategies?

Jane used Strategies 1-5 together because she had the “perfect storm” of charitable intent, IRA assets, and a qualifying life event. Most readers can stack at least two.

Quick Self-Check:

If you’re 70½+: Start with Strategy 1 (QCDs). It is the most efficient way to lower AGI dollar-for-dollar.
If you’re under 65: Prioritize Strategy 2 (Roth Conversions). Shrink the IRA before Medicare even starts.
If you’re appealing: File Strategy 5 (SSA-44) first, then deploy 1-4 for future years to prevent recurrence.

Frequent Reader Questions

Can anyone use a QCD to lower Medicare premiums?

No. The taxpayer must be age 70½ or older. If you are 70, you must wait. However, you can plan for it. Since Jane was 72, she qualified perfectly. This strategy is the only way to satisfy an RMD without the funds appearing in your Adjusted Gross Income. [cite: IRS Publication 590-B]

Does the SSA-44 appeal form always work?

It only works if the beneficiary has experienced a specific Life-Changing Event listed on the form (Marriage, Divorce, Death of Spouse, Work Stoppage/Reduction, Loss of Pension). A retiree cannot file an appeal simply because they had high capital gains or a Roth conversion spike; that is not a valid reason for a reduction.

How do I know if I’m near a cliff?

Beneficiaries must track their Year-to-Date income. Look at your pay stubs, 1099s, and realized gains. Use an IRMAA Surcharge Calculator to project where your MAGI will land before December 31st.

The Bottom Line: Don’t Be a Victim of Your Own Financial Success

Jane isn’t a financial wizard. She is proof that IRMAA avoidance is systematic, not accidental.

By deploying five tax strategies in a specific sequence: QCDs, Roth conversions, pension timing, loss harvesting, and appeals—she turned a $2,400 annual liability into $0.

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