A 64-year-old retiree with an $800,000 traditional IRA converted $150,000 to a Roth in 2024 to reduce future required minimum distributions. She paid federal income tax on the conversion and expected manageable costs. Two years later, Medicare assessed an Income Related Monthly Adjustment Amount for 2026 based on her 2024 income. Her 2024 modified adjusted gross income rose from about $60,000 to about $210,000 due to the conversion. That level placed her in IRMAA Tier 4 for a single filer, increasing Part B and Part D premiums. The result was an additional Medicare cost that partially appeared as a $1,116 charge for the remainder of 2026.
"Medicare looks at your tax return from two years prior to decide what you pay this year. For 2026 premiums, that means your 2024 income. In her case, ordinary retirement income looked tame: $40,000 in Social Security plus $20,000 in dividends, for a modified adjusted gross income of roughly $60,000. Comfortable territory, nowhere near any surcharge line."
"The conversion changed that. Adding $150,000 of converted IRA money pushed her 2024 MAGI to about $210,000. For a single filer in 2026, that lands inside IRMAA Tier 4, which covers $205,000 to $500,000. The surcharge at that tier runs about $406 a month on Part B and roughly $77 a month on Part D, or close to $483 a month above the standard premium. Over a full year, that is $5,796 in extra Medicare cost."
"The conversion tax bill was the obvious cost. At a 24% marginal federal rate, $150,000 converted meant about $36,000 in federal income tax for 2024. Add the IRMAA hit, and the all in cost of moving that money climbs to roughly $41,796. The Roth still has v"
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