How to Reduce Your IRMAA Surcharge Before It Hits Your Medicare Bill

You did everything right — saved diligently, retired on your timeline, and signed up for Medicare. Then a letter arrives from Social Security telling you that your Part B premium isn't $202.90 a month. It's $405.80. Or $527.50. Welcome to IRMAA.

The Income-Related Monthly Adjustment Amount hits harder than most retirees expect, and the timing is counterintuitive. The surcharge on your 2026 Medicare premiums is based on income you reported on your 2024 tax return — two years ago. If you had a big year (a required minimum distribution, a property sale, a Roth conversion), you're paying for it now, even if your current income is much lower.

The good news: IRMAA isn't a fixed tax. With some planning, many retirees can reduce — or entirely avoid — the surcharge. Here's what actually works.

Understand What Counts as "Income" for IRMAA

Social Security uses your Modified Adjusted Gross Income (MAGI) — which is your adjusted gross income plus any tax-exempt interest. What pushes MAGI up faster than retirees realize:

• Required Minimum Distributions (RMDs) — Every dollar pulled from a traditional IRA or 401(k) adds to MAGI
• Capital gains — Even long-term gains at favorable rates still count
• Social Security benefits — Up to 85% of your benefit may be taxable income
• Roth conversions — Moving money from traditional to Roth is fully taxable in the year it's done
• Rental income and dividends — Both count, even if reinvested

In 2026, the first IRMAA threshold starts at $109,000 for individuals and $218,000 for married couples filing jointly. Going just $1 over a bracket bumps your entire Part B premium to the next tier — which can mean hundreds more per month.

5 Strategies That Can Lower Your IRMAA Exposure

1. Time your Roth conversions carefully. Converting traditional IRA money to a Roth IRA is one of the best long-term tax moves — but doing a large conversion in a single year can spike your MAGI and trigger IRMAA two years later. Spreading conversions over several years keeps annual MAGI under control while still getting money into Roth.

2. Use Qualified Charitable Distributions (QCDs). If you're 70½ or older and charitably inclined, a QCD lets you send up to $105,000 per year directly from your IRA to a qualifying charity. That distribution satisfies your RMD without being counted as taxable income — which means it doesn't touch your MAGI. For people who donate anyway, this is a straightforward win.

3. Structure annuity income strategically. Non-qualified annuities (purchased with after-tax money) are taxed on an "exclusion ratio" — only the earnings portion of each payment counts as ordinary income. The return of your original principal is tax-free. Depending on how your annuity is structured, this can mean a meaningfully lower MAGI than an equivalent payout from a traditional IRA. For retirees relying heavily on annuity income, this distinction matters.

4. Appeal if you had a life-changing event. IRMAA can be appealed if your current income is significantly lower than your 2024 return due to a qualifying event — retirement, divorce, death of a spouse, or loss of income-producing property. The form is SSA-44 and it's worth filing. Social Security will re-calculate your premium using more recent income data.

5. Review your RMD strategy annually. As IRA balances grow, RMDs tend to force large taxable distributions whether you need the money or not. Some retirees address this by spending down traditional IRA assets earlier in retirement (before RMDs begin at age 73), keeping those balances — and future forced distributions — lower. This requires modeling, but the IRMAA savings over a decade can be substantial.

What the 2026 Brackets Actually Cost

To make this concrete: if you're married filing jointly and your 2024 MAGI was $275,000, your 2026 Part B premium is $405.80 per month — versus $202.90 for someone just below the threshold. That's an extra $2,435 per year, per person. For a couple, that's nearly $5,000 annually in additional Medicare costs from crossing one income line.

Small income shifts — a QCD here, a smoother Roth conversion there — can keep you under a bracket and save real money. It's not tax avoidance; it's reading the rules and using them.

The Bigger Picture: Your Income Sources Matter

IRMAA is one of several places where how your retirement income is structured matters as much as how much you have. The mix of taxable IRA distributions, Social Security benefits, annuity payments, and capital gains all interact in ways that affect your Medicare costs, your tax bracket, and even how much of your Social Security is taxable.

There's no universal answer — it depends on your account balances, your expected expenses, your Social Security filing age, and what income sources you've built. But this is exactly the kind of planning that prevents expensive surprises.

If you're in or near retirement in Texas or Oklahoma and want to understand how your income structure affects your Medicare costs — and whether an annuity might play a useful role — I'm happy to walk through it with you. No obligation, no pressure.

Book a free 30-minute call at retire360.app/book.