According to Kiplinger, the average high-income beneficiary pays $3,847 per year in Medicare Part B and Part D surcharges. But what if I told you that with proper planning, you could reduce or eliminate these costs entirely?
This isn’t about finding a loophole; it’s about understanding the rules better than the government expects you to. The Medicare surcharge reduction strategies you implement today. Frequently asked questions about IRMAA answered in this guide See the 5-step IRMAA recovery plan Jane used to erase her $2,400 Medicare surcharge.
Like strategic Roth conversions or Qualified Charitable Distributions (QCDs) will save you thousands in avoided IRMAA costs two years from now. A couple earning $225,000, for example, could save $2,330.40 annually by reducing their MAGI by just $7,001, keeping them under the 2026 threshold of $218,000.
This is your complete playbook. We’re going beyond the basics of what IRMAA is and diving deep into the how to avoid IRMAA strategies that put money back in your pocket.
🎯 9 Strategies to Avoid IRMAA
- Qualified Charitable Distributions (QCDs): The #1 tool for retirees age 70½+.
- Strategic Roth Conversions: Convert before age 63 to eliminate future IRMAA.
- Maximize Tax-Deferred Contributions: Reduce MAGI while still working.
- Tax-Efficient Withdrawal Sequencing: Prioritize Roth and HSA funds first.
- Harvest Capital Losses: Offset gains that trigger IRMAA.
- Borrow Against Assets: Access cash without creating taxable income.
- Spread Large Withdrawals: Avoid one-time MAGI spikes.
- Optimize Social Security Timing: Delay benefits for lower early income.
- Utilize HSA Distributions: Withdraw tax-free for medical expenses.
Key Takeaways Ahead
Watch this quick YouTube video I put together that summarizes this article. Just press play:
Understanding IRMAA: Why You Need Avoidance Strategies
The key to avoiding Medicare’s Income-Related Monthly Adjustment Amount (IRMAA) is understanding its delayed impact. Your 2024 income dictates your 2026 IRMAA. A two-year lag that turns seemingly smart financial moves into a surprise tax penalty. Additionally, the Medicare hold harmless rules can protect certain beneficiaries from premium increases that exceed the amount of their Social Security cost-of-living adjustment, providing some relief. However, these rules may not apply in all situations. The relationship between capital gains and IRMAA impacts can result in unanticipated increases in Medicare premiums for high-income earners.
The Cost of Not Planning (Real Examples)
I’ve seen the same scenarios play out for decades: small, preventable mistakes leading to massive, multi-year surcharges.
- The RMD Surprise:
- Susan, age 73, took her first Required Minimum Distribution (RMD) of $34,000 from her $900,000 IRA. Her income before the RMD was $85,000, but the RMD pushed her total MAGI to $119,000.
- Result: Tier 1 IRMAA in 2026, costing her $1,165.20 per year ongoing.
- What she could have done: Used QCDs to satisfy the RMD.
- The Roth Conversion at 65:
- James converted $100K to a Roth IRA at age 65. The conversion spiked his 2024 MAGI to $180,000.
- Result: Tier 3 IRMAA in 2026, costing him $4,689.60 per year for that one-time conversion.
- What he should have done: Converted at age 60-62 before Medicare enrollment.
The average cost of poor planning? And IRMAA mistakes people make? From what I have seen, $2,500 to $5,000 per year in unnecessary IRMAA surcharges over a 20-year retirement, totaling $50,000 to $100,000.
- Here’s my article on how IRMAA works, for a deeper dive.
- Official Medicare Rules resource
Could You Qualify for an IRMAA Appeal?
See if you're eligible to reduce your Medicare premiums with our free interactive tool
When to Start IRMAA Planning (Age 60 Minimum)
IRMAA planning is all about timing. My IRMAA Planning Checklist can help you. And proper asset allocation. And knowing how your MAGI is calculated for IRMAA. You have a GOLDEN WINDOW where you can manipulate your income without Medicare consequences.
- Ages 60-63 (Prime Planning Years): Execute aggressive Roth conversions, realize capital gains strategically, and take large IRA withdrawals for one-time purchases. The income in this window determines your first-year Medicare costs.
- Age 63 (Last Year of Income Freedom): Income in this year determines your first-year (age 65) IRMAA. This window closes forever at age 63.
- Age 73+ (RMD Years): Your flexibility is limited. You must take RMDs, making QCDs your primary IRMAA avoidance tool.
Strategy 1: Make Qualified Charitable Distributions (QCDs)
The Strategy: Use Qualified Charitable Distributions (QCDs) to satisfy your Required Minimum Distribution (RMD) without increasing your MAGI.
A QCD allows individuals age 70½ or older to donate up to $105,000 annually (indexed for inflation) directly from their IRA to qualified charities.
- The MAGI Power:
Traditional IRA withdrawals increase MAGI dollar-for-dollar. QCDs let you satisfy RMDs and donate to charity WITHOUT increasing MAGI. It’s the only way to take money from a traditional IRA without IRMAA consequences. - QCD Example:
Saving $1,165/Year in IRMAA: Linda, age 75, has an RMD of $35,000 and $95,000 in other income. If she uses $26,000 in QCDs, her total MAGI is reduced just enough to stay under the $109,000 threshold, saving her the full $1,165.20 annual IRMAA surcharge.
💡 Expert Tip: QCDs are the #1 IRMAA avoidance tool for retirees age 70½+. Even if you don’t normally give to charity, the IRMAA savings alone can make it worthwhile—you’re essentially getting the government to match your donation.
Strategy 2: Execute Strategic Roth Conversions
The Strategy: Convert traditional IRA funds to a Roth IRA during ages 60-63 (before Medicare enrollment). You pay income tax upfront, but all future Roth withdrawals are tax-free AND don’t count toward MAGI for IRMAA purposes.
Converting at age 65+ means you pay income tax AND trigger IRMAA for two years. A double penalty. Converting at ages 60-63 means you pay the tax before Medicare is even a factor. And don’t forget, IRMAA could impact your Part D Prescription coverage too.
The Art of “Filling Brackets”
Don’t convert your entire IRA at once. Instead, convert just enough each year to ‘fill’ your current tax bracket (e.g., the 22% bracket) without jumping to the next bracket OR crossing IRMAA thresholds.
You can model this instantly using our tool:
Roth Decision Calculator
Roth Conversion Summary
| Scenario | Est. After-Tax Value at Retirement |
|---|---|
| Convert to Roth | |
| Keep Traditional | |
| Difference |
Roth vs. Traditional Contribution Summary
| Account Type | Est. After-Tax Value at Retirement |
|---|---|
| Roth Contribution | |
| Traditional Contribution | |
| Difference |
The Tool Gave You Answers. The Newsletter Gives You Moves.
Disclaimer: Calculations are estimates based on inputs and simplified tax assumptions. They do not account for state taxes beyond the rate entered, phase-outs, alternative minimum tax, potential tax law changes, or specific investment performance. This is not tax or investment advice. Consult qualified professionals.
- Question Answered: “Do Roth withdrawals count toward IRMAA?”
- Answer: No. Qualified Roth IRA and Roth 401(k) distributions do NOT count toward MAGI and have zero IRMAA impact.
🚀 Take Action: Start Your Roth Conversion
Roth conversions are a ‘pay now, save later’ strategy. You pay income tax upfront but eliminate BOTH income tax AND IRMAA on future withdrawals. Open a Roth IRA with a trusted platform like Fidelity or Vanguard and start converting today.
Strategy 3: Maximize Tax-Deferred Retirement Contributions
The Strategy: If you’re still working, maximize contributions to traditional 401(k), 403(b), or IRA to reduce your MAGI. Every dollar contributed lowers your MAGI by one dollar.
This is the simplest way to execute MAGI reduction strategies while you’re still earning a paycheck.
- 401(k)/403(b) Max:
For those age 60-63, you can contribute up to $34,000 (with catch-up additions) in 2024. This single move lowers your MAGI by $34,000, potentially moving you down 1-2 IRMAA tiers. - Real-World Application:
A couple both age 61, each maxing 401(k) and IRA, can reduce combined MAGI by $100,000 per year. This alone could keep them under IRMAA thresholds indefinitely.
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Strategy 4: Use Tax-Efficient Withdrawal Sequencing
The Strategy: Control which accounts you withdraw from and when. The order matters for IRMAA purposes.
IRMAA-Optimized Withdrawal Order: Prioritize accounts that are invisible to the MAGI calculation. Or use my Medicare IRMAA Surcharge Calculator as well.
- Roth accounts (tax-free, $0 MAGI impact).
- HSA for medical expenses (tax-free, $0 MAGI impact).
- Taxable accounts (capital gains may be lower rate, but watch for the cliff).
- Tax-deferred accounts (carefully, watching MAGI).
If you’re at the $107,000 MAGI level and need $10,000, taking it from Roth ($0 MAGI impact) saves $1,165.20 in IRMAA vs. taking it from a traditional IRA.
Strategy 5: Harvest Capital Losses
The Strategy: Sell losing investments to offset capital gains, reducing MAGI and avoiding IRMAA.
- How It Works:
Capital gains from stock sales are added to your MAGI. By executing tax-loss harvesting (selling losing positions), you offset those gains dollar-for-dollar. - IRMAA Application:
If you have $18,000 in capital gains that push your MAGI to $113,000 (triggering IRMAA), harvesting $18,000 in losses offsets it to a $0 net gain, keeping your MAGI at $95,000 and avoiding the $1,165.20 annual surcharge. - Questions Answered: “Do capital gains count as income for IRMAA?”
- Answer: Yes, both short-term and long-term capital gains count fully toward MAGI. Tax-loss harvesting can eliminate this IRMAA trigger.
Strategy 6: Borrow Against Assets Instead of Selling
The Strategy: Use loans to access cash without triggering MAGI increases and IRMAA.
- Securities-Backed Lines of Credit (SBLOC):
Borrow against your investment portfolio. Borrowed money is not income, so it has $0 MAGI impact. This is ideal for short-term cash needs when selling stocks would push you over an IRMAA cliff. - Reverse Mortgages:
For retirees 62+, reverse mortgage proceeds don’t count as income. You can access home equity without any MAGI impact.
Strategy 7: Spread Large Withdrawals Across Multiple Years
The Strategy: Instead of one large withdrawal, take smaller amounts over multiple years to stay under IRMAA thresholds.
This directly addresses scenarios like large IRA withdrawals for an RV purchase or a home down payment for children.
- The One-Time Withdrawal Trap:
Taking a $150,000 IRA withdrawal in one year could spike your MAGI to $235,000, resulting in a multi-thousand dollar IRMAA penalty two years later. - Better Approach:
Take $50,000 per year for three years. Each year’s MAGI remains manageable, keeping you in a lower IRMAA tier.
Strategy 8: Optimize Social Security Timing
The Strategy: Delay Social Security benefits to keep MAGI lower in early Medicare years.
- The Trade-Off:
Up to 85% of Social Security benefits are taxable and count toward MAGI at high income levels according to the Social Security Administration. - IRMAA Planning Angle:
If you claim SS at 62 and enroll in Medicare at 65, your combined working income + SS may trigger IRMAA. Delaying SS to 67-70 means your income is lower (ages 65-67/70), giving you time to execute Roth conversions and draw down taxable accounts without triggering IRMAA.
Strategy 9: Utilize Health Savings Account Distributions
The Strategy: Use HSA funds for qualified medical expenses instead of IRA funds.
- IRMAA Benefit:
HSA withdrawals for qualified medical expenses (including Medicare premiums!) are tax-free and equal $0 MAGI impact. - The Triple Tax Advantage:
Contributions are tax-deductible (lowers MAGI when contributed), growth is tax-free, and withdrawals for medical expenses are tax-free (don’t count toward MAGI). - Retirement Tactic:
Save all medical receipts throughout your working life. You can reimburse yourself years later in retirement using your HSA balance, creating tax-free, IRMAA-proof income when you need it most.
How to Avoid IRMAA When Selling a House
Question: “How to avoid IRMAA when selling a house?”
- Primary Residence Exclusion:
Only gains ABOVE the $250,000 (single) or $500,000 (married) exclusion count toward MAGI.
If you sell a home with a $600K gain (married), $100K is added to MAGI, which could trigger IRMAA for two years. - Installment Sales Strategy:
For investment properties or large gains, use an installment sale over 2-3 years.
This allows the gain to be recognized proportionally each year, avoiding a massive, one-time IRMAA spike.
⚠️ Critical Note: Home sales do NOT qualify for IRMAA appeals. You cannot retroactively fix this via Form SSA-44. The ONLY solution is planning your Medicare ahead.
Creating Your Multi-Year IRMAA Avoidance Plan
Question: “How to reduce IRMAA after retirement?”
The best way to reduce IRMAA after retirement is to have a structured, multi-year plan.
- Years 60-63 (Pre-Medicare): This is your golden window. Maximize Roth conversions and complete any planned home sales or large asset sales.
- Years 63-65 (Critical Window): Your Age 63 income determines your Age 65 IRMAA. Be conservative.
- Age 65+ (Ongoing Management): Implement an annual review. If you are within $10,000 of a cliff, execute QCDs (if 70.5+) or tax-loss harvesting.
🎯 Plan Smarter, Not Harder
Get your retirement income on track with a multi-year projection that models the exact impact of Roth conversions, RMDs, and IRMAA.
Ultimate Retirement Readiness Projector
See if you're on track to fund your desired retirement lifestyle. Adjust the assumptions to explore your path to financial agency.
Your Retirement Readiness Outlook
- Portfolio Growth
- Retirement Sustainability
- Goal vs. Projection
Chart shows projected portfolio balance during retirement years.
Compares required vs. projected portfolio value at retirement age.
This calculator uses deterministic projections based on your inputs. Real-world returns vary. Consult a financial professional for personalized advice.
The Tool Gave You Answers. The Newsletter Gives You Moves.
When to Hire a Financial Advisor
If your retirement accounts are over $500,000, you have complex income (business, rentals), or you are within 5 years of Medicare (ages 60-64), professional help is warranted.
- Cost vs. Benefit:
A planning fee of $2,000-$5,000 can result in potential IRMAA savings of $5,000-$20,000+ over retirement—a clear ROI.
FAQ Section (What People Ask)
What steps really work to avoid IRMAA?
The most effective steps are income management strategies:
1. Limiting taxable withdrawals (IRA, 401k),
2. Proactively converting assets to Roth IRAs during low-income years,
3. Using Qualified Charitable Distributions (QCDs) to offset RMDs, and
4. Filing Form SSA-44 for a life-changing event like retirement.
Do Roth conversions make IRMAA worse?
A Roth conversion increases your MAGI in the year the conversion occurs, potentially making IRMAA worse two years later. However, if done strategically during low-income years (e.g., your Retirement Gap Years) and kept below the IRMAA threshold, they prevent the much larger penalty that would result from RMDs years later.
How often is IRMAA calculated?
IRMAA is recalculated and reset annually by the Social Security Administration (SSA), but the determination is always based on your Modified Adjusted Gross Income (MAGI) from two years prior (the 2-Year Look-Back Rule).
Can I get IRMAA removed if my income drops?
Yes, you can get the Medicare Part B surcharge removed if your income drops due to a qualifying life-changing event (LCE) such as retirement or death of a spouse. You must file Form SSA-44 with the SSA to report the new, lower income.
Who should I contact for help locally or online?
You should contact a Certified Financial Planner (CFP®) who specializes in tax-first retirement planning and income smoothing. For local assistance in areas like Florida, look for advisors with deep expertise in state-specific Medicare planning and income management strategies.
Conclusion
IRMAA is avoidable with proper planning. The 9 strategies—QCDs, Roth conversions, retirement contributions, withdrawal sequencing, tax-loss harvesting, asset-based loans, spreading withdrawals, SS timing, and HSA distributions—can save $1,000-$7,000+ annually per person.
The most important takeaway: Start at age 60. The younger you are, the more powerful your strategies become. Don’t let your financial past shock your healthcare future.
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Note: The content provided in this article is for informational purposes only and should not be considered as financial or legal advice. Consult with a professional advisor or accountant for personalized guidance.
