If you are considering a Roth conversion in retirement, there is one Medicare rule that can sneak up on you: IRMAA, the Income-Related Monthly Adjustment Amount. In plain English, IRMAA is a surcharge that can raise what you pay for Medicare Part B and Part D when your income is above certain thresholds.
Here is the twist that trips people up: IRMAA is based on your income from two years ago. So a conversion you do this year can raise your Medicare premiums two calendar years later.
I am not against Roth conversions. I am a huge fan when they are done intentionally. But I have seen too many smart people do a big conversion, celebrate the tax-free growth, and then get blindsided by higher Medicare costs down the road.
Let’s connect the dots, show how the two-year lag works, and walk through practical ways to time extra income so you can keep more of your money.
IRMAA in one minute
Most people pay the standard Medicare premium amounts. But if your income is high enough, Medicare adds an IRMAA surcharge on top of:
- Part B (doctor visits, outpatient care)
- Part D (prescription drug coverage)
Your IRMAA status is generally determined using your Modified Adjusted Gross Income (MAGI) from your federal tax return. For Medicare IRMAA purposes, MAGI is generally your Adjusted Gross Income (AGI) plus tax-exempt interest (like interest from many municipal bonds). For most households, that means the number to watch is your AGI plus any muni bond interest, with a few edge-case additions depending on your return.
Key point: A Roth conversion increases your taxable income in the year you do it, which can push your MAGI over an IRMAA threshold.
One more key point: IRMAA thresholds change over time and differ by filing status, so you want to look up the current tiers for the year you are planning.
The two-year lookback
Medicare does not look at your current-year income to set IRMAA. It typically looks at your tax return from two years prior.
Example timeline
- 2026: You do a large Roth conversion.
- 2027: You file your 2026 tax return showing higher MAGI.
- 2028: Social Security receives IRS data and uses that 2026 MAGI to set your IRMAA for 2028.
That lag is why IRMAA feels like a surprise bill. The conversion is long done, the taxes are long paid, and then Medicare shows up two years later asking for more every month.
Also important: IRMAA is not a one-time fee. It is typically assessed as a monthly add-on and applies for the full calendar year, unless Social Security updates your determination (for example, if they receive new tax data or you win an appeal).
In real life, the surcharge often shows up as higher amounts withheld from your Social Security check. If you are not collecting Social Security yet, you can be billed directly.
How conversions trigger IRMAA
A Roth conversion moves money from a pre-tax retirement account (like a Traditional IRA) into a Roth IRA. The converted amount is generally treated as ordinary income in that tax year.
So if you convert $50,000, your income for the year is basically $50,000 higher (with caveats for deductions and other income sources). That higher income can:
- Push you into a higher tax bracket
- Increase taxes on Social Security (depending on your situation)
- And, two years later, potentially trigger IRMAA
This does not mean conversions are “bad.” It just means the true cost of a conversion is not only the income tax you pay this year. It can also include higher Medicare premiums later.
IRMAA tiers and cliffs
IRMAA thresholds work in tiers. When your MAGI crosses into a higher tier, the surcharge generally jumps to the next level rather than phasing in smoothly.
Practically speaking, this can create a cliff feeling: being a little over a threshold can cost you a lot more than you expected.
Because the threshold lines change over time and vary by filing status, I am not going to hardcode numbers that will go stale. Instead, the planning mindset is what matters:
- Estimate your MAGI before you convert.
- Find the next IRMAA threshold for your filing status.
- Decide if you want to stay under it or intentionally cross it because the long-term Roth benefit is worth it.
If you are doing conversions starting the year you turn 63, this tier awareness becomes extra important because those income years can be the base years for your first Medicare premiums at 65.
The sweet spot before Medicare
If you are in your early 60s, there is often a planning window that looks like this:
- You have retired (or cut back), so your income is lower.
- You are not on Medicare yet, so IRMAA is not in play.
- You might be living off cash savings or taxable investments.
For many households, this is the best time to do larger conversions, because you can:
- Use up lower tax brackets strategically
- Potentially reduce future Required Minimum Distributions (RMDs)
- Avoid Medicare premium surcharges tied to those conversion years
Quick rule of thumb: Ages 60 to 62 often provide more flexibility than the years starting when you turn 63, since Medicare uses a two-year lookback.
Small but important caveat: Most people first enroll in Medicare at 65, but some are on Medicare earlier (for example, due to disability) and some delay Part B. Your “safe window” depends on your actual Medicare start date.
Already on Medicare
Once Medicare is part of your life, Roth conversions can still make sense, but you want to be much more deliberate. Here are practical ways to time extra income.
1) Fill up to the next tier
This is my favorite approach for value-spenders who want a plan, not deprivation. The idea is simple:
- Estimate your MAGI for the year without a conversion.
- See how much room you have before the next IRMAA threshold.
- Convert only enough to land comfortably below that line.
Instead of asking “How much should I convert?”, you ask “How much can I convert without triggering the next surcharge tier?”
Mini example (generic): If you estimate your MAGI will land about $2,000 below the next IRMAA tier, your conversion “room” is roughly $2,000, and I would still leave a buffer for late-year surprises.
2) Split conversions across tax years
If you were planning a single big conversion, consider dividing it into two smaller conversions across two calendar years. You may pay:
- Less in taxes (by avoiding a higher bracket)
- Less in Medicare premiums (by avoiding a higher IRMAA tier)
This can be especially helpful if your income is already close to an IRMAA threshold.
3) Use low-income years on purpose
Some years are naturally lower income, like:
- A year between retirement and Social Security claiming
- A year with fewer capital gains
- A year after you stop a part-time job
Those are prime years to do more conversion work while minimizing the odds of crossing an IRMAA tier.
4) Watch the hidden MAGI boosters
People often focus only on the Roth conversion amount. But other income can quietly push you over the line:
- Capital gains from selling investments
- Large dividends in taxable accounts
- RMDs once they start
- Tax-exempt interest from municipal bonds (counts in Medicare MAGI)
- Sale of a business or real estate (especially if it creates a big gain)
If one of these is happening this year, it may be a “small conversion year,” even if your long-term plan includes conversions.
5) Avoid year-end surprises
Conversions late in the year can be fine, but they raise the risk of miscalculating your MAGI if something unexpected happens in November or December (a fund distribution, a surprise bonus, a large gain).
If you are playing close to an IRMAA threshold, consider converting earlier and leaving yourself a buffer.
Triggered IRMAA
Sometimes IRMAA is legitimate. You had a high-income year and Medicare premiums went up accordingly.
But sometimes it is misleading because your income dropped due to a major life change, and Medicare is still using that older tax return. In certain situations, you can ask Social Security to reconsider your IRMAA determination using a process often called a life-changing event appeal.
The form commonly used is SSA-44 (Medicare Income-Related Monthly Adjustment Amount, Life-Changing Event).
Examples that can qualify (in general terms, using SSA-style categories) include:
- Work stoppage or work reduction
- Marriage, divorce or annulment, or death of a spouse
- Loss of income-producing property due to circumstances beyond your control
- Pension plan settlement or pension reduction in certain cases
This is not a “my Roth conversion was big” exception. A conversion is voluntary income, and Medicare generally treats it as income. But if your income dropped for an approved reason, it is worth looking into the appeal process.
If you think you qualify, look up the current SSA-44 instructions and consider getting help from a tax pro or your local Social Security office.
Planning checklist
If you want a clear roadmap, here is the exact order I would follow:
- Estimate this year’s MAGI without any conversion.
- Add expected extras like capital gains, dividends, and tax-exempt interest.
- Look up current IRMAA tiers for your filing status.
- Decide your target: stay under the next tier or cross it intentionally.
- Choose a conversion amount that fits your target and tax bracket plan.
- Re-check in Q4 before you finalize anything.
- Document your reasoning so two years later you remember why your premiums changed.
That last step sounds silly, but it helps. Two years is long enough to forget the details.
Mistakes to avoid
Converting “whatever is left” in December
This is where IRMAA mistakes happen. People rush, guess their income, and accidentally hop a tier.
Ignoring tax-exempt interest
Municipal bond interest may be tax-free, but it can still raise Medicare MAGI.
Forgetting your spouse’s income
For married couples filing jointly, IRMAA is based on household income. One spouse’s conversion can raise premiums for both spouses on Medicare.
Assuming IRMAA makes conversions not worth it
Sometimes paying IRMAA is still the right move. If a conversion meaningfully lowers future RMDs, reduces the risk of higher future tax rates, or improves survivor planning, the math can still work out. The goal is not “never pay IRMAA.” The goal is “do it on purpose.”
When paying IRMAA can be smart
Here are a few scenarios where I have seen people choose to cross an IRMAA tier strategically:
- You are facing much larger RMDs later and want to shrink the pre-tax balance now.
- You expect higher future tax rates (either personally or due to law changes), so paying more now is acceptable.
- You are doing a one-time conversion for estate planning reasons and are comfortable with the tradeoff.
- You are in a temporarily low tax bracket but still close to an IRMAA threshold and prefer optimizing taxes over premiums, or vice versa.
This is where a tax-aware, Medicare-aware projection can pay for itself.
Bottom line
Roth conversions are one of the best tools in the retirement toolbox. But once Medicare is in the picture, conversions stop being a “tax-only” decision.
Because IRMAA uses a two-year lookback, the income you create today can raise your Part B and Part D costs later. The fix is not complicated, but it does require planning: estimate MAGI, know the tier lines, and time your conversions around low-income years whenever possible.
My personal rule: if a Roth conversion is big enough to change your tax bracket, it is big enough to check for an IRMAA surprise two years from now.
If you are planning conversions, consider running a simple projection (even a spreadsheet) and reviewing it with a tax professional or financial planner who understands both taxes and Medicare premium rules.