Roth Conversions and Medicare IRMAA: What Retirees Should Consider

A household can spend decades saving in 401(k)s, traditional IRAs, and other tax-deferred retirement accounts, then discover that a higher-income year affects Medicare premiums later. One reason is the Income-Related Monthly Adjustment Amount, commonly called IRMAA. IRMAA is an additional amount some Medicare beneficiaries pay for Part B and Part D coverage when income exceeds specified thresholds.

A Roth conversion can be one source of income that affects IRMAA. Required minimum distributions, pension income, interest, dividends, capital gains, and other taxable income may also matter. The point is not that retirees should avoid IRMAA in every situation. It is to understand how Medicare premiums fit into a broader retirement-income and tax-planning decision.

What Is Medicare IRMAA?

IRMAA is a premium adjustment for Medicare Part B and Part D. The Social Security Administration generally determines whether IRMAA applies by reviewing a tax return from two years earlier. For 2026 Medicare premiums, Social Security generally uses modified adjusted gross income from the 2024 federal income tax return. If that return is not available, Social Security may use information from 2023 instead.

For IRMAA purposes, modified adjusted gross income generally means adjusted gross income plus tax-exempt interest income. This can include income from wages, pensions, taxable Social Security benefits, interest, dividends, capital gains, required minimum distributions, and taxable Roth conversions. The Social Security Administration's Medicare premium guidance explains the current thresholds and calculation framework.

The two-year lookback can make IRMAA easy to overlook. A Roth conversion completed in 2026 generally would not affect Medicare premiums until 2028. By then, the tax decision may feel disconnected from the higher premium notice. A retirement planning process for South Jersey households can place this timing alongside spending, income sources, and anticipated changes in retirement.

2026 Medicare IRMAA Thresholds

The following table summarizes 2026 Medicare Part B premiums and Part D IRMAA amounts for people who file as single or married filing jointly. The income figures generally reflect 2024 modified adjusted gross income.

Part D IRMAA is paid in addition to the premium for the individual's prescription drug plan. For a married couple where both spouses are enrolled in Medicare, moving from the standard tier to the first IRMAA tier would add about $2,297 annually in combined Part B and Part D costs, excluding their underlying Part D plan premiums. Moving into the second tier would add about $5,770 annually.

These figures can change each year. Households that file as married filing separately may be subject to different thresholds and should review the applicable Social Security guidance. Sources: Centers for Medicare & Medicaid Services, 2026 Medicare Parts A and B premiums and Social Security Administration Medicare premium information, accessed September 9, 2026.

Why the Years Before and After Retirement May Matter

Retirement can change the timing and sources of a household's income. In some cases, earned income ends before Social Security benefits begin or before required minimum distributions apply. That period may create an opportunity to evaluate how withdrawals, Roth conversions, capital gains, and other income sources fit together.

However, lower income in a given year does not automatically mean a Roth conversion is appropriate. A conversion is taxable income in the year it occurs. It may affect federal and state taxes, Medicare premiums, available deductions or credits, taxation of Social Security benefits, and a household's cash-flow needs. A tax planning approach for retirees can help identify questions to review with a qualified tax professional. Results depend on individual circumstances and applicable law.

For people approaching Medicare eligibility, timing deserves particular attention. A person does not pay IRMAA before enrolling in Medicare, but income during the relevant two-year lookback period may affect the premium they pay after enrollment begins. A conversion decision before age 65 should therefore be evaluated against the expected enrollment date, the applicable lookback year, and projected household income.

Three Illustrative Planning Situations

The following situations are simplified examples. They are not recommendations and do not represent actual client experiences.

A Household Several Years From Medicare Enrollment

Consider a married household in its early 60s that has recently stopped working. Most of its retirement savings are in tax-deferred accounts, and it has not yet begun Social Security or Medicare. Its taxable income may be lower than it was during its working years.

Before deciding whether to complete a Roth conversion, the household may evaluate its expected tax bracket, New Jersey and federal tax treatment, cash available to pay taxes outside the retirement account, the expected start dates for Social Security and Medicare, and whether the conversion year falls within the future IRMAA lookback period. The relevant question is not simply whether a conversion fits within a tax bracket today. It is whether the conversion supports the household's broader retirement-income plan after accounting for potential costs and trade-offs.

A Household Already Enrolled in Medicare

Consider a couple already receiving Social Security and enrolled in Medicare. Their income places them just below an IRMAA threshold. A Roth conversion could move their modified adjusted gross income into the next tier, depending on final income for the year. Interest, dividends, capital gains, business income, pension payments, and other tax items may also affect the final total.

In this situation, a household may review projected income before year-end and leave room below a threshold rather than targeting it exactly. This does not eliminate uncertainty. Tax forms and investment-related income can still change late in the year. Paying a higher Medicare premium for a limited period could be a deliberate choice in some circumstances, but that trade-off should be evaluated with complete tax and cash-flow information.

A Household Taking Required Minimum Distributions

Consider a retired couple whose required minimum distributions already place them in an IRMAA tier. Required minimum distributions generally cannot be converted to a Roth IRA. The required distribution must first be taken and included in taxable income before an additional eligible amount may be converted.

For charitably inclined IRA owners age 70½ or older, a qualified charitable distribution may be another item to evaluate. In 2026, an eligible individual may generally direct up to $111,000 from an IRA to qualifying charities through a qualified charitable distribution. Subject to IRS requirements, a QCD can count toward an applicable required minimum distribution without being included in income. Charitable decisions should be driven by charitable intent rather than tax treatment alone. The IRS explains the requirements in its retirement-plan FAQs about required minimum distributions.

Practical Questions to Review Before a Roth Conversion

What Will Taxable Income Look Like This Year?

Taxable income may include pension payments, wages, self-employment income, capital gains, dividends, interest, Social Security benefits, required minimum distributions, and the proposed Roth conversion. The IRS 2026 inflation-adjustment announcement includes federal tax-bracket and standard-deduction amounts that may be relevant to this analysis.

Could the Conversion Affect Medicare Premiums Two Years Later?

A conversion adds to modified adjusted gross income. For someone enrolled in Medicare, or approaching enrollment, the possible two-year IRMAA effect should be included in the estimate. Medicare thresholds are adjusted periodically, so a planning estimate should not assume that today's thresholds will apply in a future year.

Is There a Buffer Below an IRMAA Threshold?

IRMAA uses income tiers. A household that exceeds a threshold may be subject to the premium associated with the next tier. Because final income can change during the year, some households may prefer not to plan to the exact dollar. A reasonable buffer can help account for additional interest, dividends, realized gains, or other income reported after a conversion decision is made.

How Do Capital Gains and Other Income Fit In?

Long-term capital gains, dividends, interest, and other taxable income may affect both a household's tax picture and its IRMAA exposure. A Roth conversion should not be considered in isolation from expected portfolio income, the sale of appreciated assets, or business-related income. For those who are already retired, Social Security planning for South Jersey retirees may also be part of the broader income discussion.

What Happens if Circumstances Change?

Social Security allows beneficiaries to request a new IRMAA determination after certain qualifying life-changing events that reduce household income. Examples include retirement, work reduction, death of a spouse, divorce, loss of income-producing property, and loss of pension income. A Roth conversion, capital gain, or other voluntarily generated income generally is not itself a qualifying life-changing event. More information is available through SSA Form SSA-44 and the Social Security Administration's IRMAA reduction guidance.

The Bottom Line

IRMAA is not a tax. It is an income-based adjustment to Medicare Part B and Part D premiums. Its two-year lookback means a retirement-income decision can affect Medicare costs well after the year in which that decision was made.

Roth conversions may be one item to evaluate when coordinating taxes, Medicare premiums, required minimum distributions, Social Security, charitable giving, and retirement cash flow. They can involve meaningful trade-offs, including current taxes and potentially higher Medicare premiums in future years. A useful planning process reviews these factors annually, especially before year-end, when there may still be time to assess the current year's income and available options.

For readers approaching or living in retirement in Voorhees, Cherry Hill, and nearby South Jersey communities, a financial advisor in Voorhees, NJ can provide a structured setting to organize these questions. The focus should be on the complete financial picture and the trade-offs that matter to the household, rather than on a generic formula or promised outcome.

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