Do Roth Conversions Increase Medicare Premiums?
Do Roth Conversions Increase Medicare Premiums?
Yes — but the more important question is whether that changes anything. For many retirees, it shouldn't.
Yes — but only under certain circumstances, and only two years after the fact. That combination of "sometimes" and "delayed" is exactly what makes this one of the more common surprises in retirement.
A Roth conversion that looks clean on paper in October can quietly add thousands of dollars to your Medicare bill in two years. Most people don't connect those two events because there's a two-year gap between them. By the time the premium surcharge arrives, the conversion that caused it feels like ancient history.
But here's the more important question — and the one most articles on this topic miss entirely: does a higher Medicare premium actually make the conversion a bad idea? For many retirees, the answer is no. IRMAA is a real cost that deserves a place in the analysis. It isn't always a reason to stop.
Here's what's actually happening, and how to think about it clearly.
How Medicare Premiums Work — and Why Income Matters
Most retirees pay the standard Medicare Part B premium. In 2026, that's $202.90 per month. But Medicare doesn't charge everyone the same amount. Higher-income beneficiaries pay a surcharge called IRMAA — the Income-Related Monthly Adjustment Amount — on top of both their Part B and Part D premiums.
IRMAA isn't a penalty. It's just Medicare's way of charging more to people who earn more. The problem is that "income" for this purpose includes things most retirees don't think of as income — including Roth conversions.
And here's the wrinkle that catches people: Medicare doesn't look at what you earned this year. It looks at what you earned two years ago. Your 2026 Medicare premiums are based on your 2024 tax return. A conversion you do in 2026 won't show up in a Medicare bill until 2028.
That two-year lag is why so many people get caught off guard. The income event and the cost have almost no relationship in time.
What Counts as Income for IRMAA
Medicare uses your Modified Adjusted Gross Income — essentially your adjusted gross income plus any tax-exempt interest. A Roth conversion adds to MAGI dollar for dollar, the same way wages or a pension payment would.
So if your other income totals $200,000 and you convert $75,000 from a traditional IRA, your MAGI is $275,000. Medicare will use that figure two years later to determine whether a surcharge applies.
A few things worth noting: Roth conversions count toward MAGI. Roth withdrawals — money you pull from an already-converted Roth account — do not. That distinction matters a lot for long-term planning. The tax you pay on a conversion now is the tax your future self doesn't pay on withdrawals later, and it's income that won't show up in your Medicare calculation down the road. A Roth account that's been funded over years of conversions quietly lowers your future MAGI — which means lower future IRMAA exposure too.
The 2026 IRMAA Brackets
For 2026, Medicare surcharges are based on your 2024 tax return and kick in at the following levels for married couples filing jointly:
| 2024 MAGI (Married Filing Jointly) | Monthly Part B Surcharge (per person) |
|---|---|
| Up to $218,000 | $0 — standard premium only |
| $218,001 – $274,000 | +$81.20 |
| $274,001 – $342,000 | +$202.90 |
| $342,001 – $410,000 | +$324.60 |
| $410,001 – $749,999 | +$446.30 |
| $750,000 and above | +$487.00 |
Single filers face the same surcharge amounts at thresholds that are roughly half of those above, starting at $109,000. Part D adds another $14.50 to $91.00 per month per person on top of this.
Because both spouses pay independently, a married couple that crosses the first threshold owes an extra $162.40 per month between them — nearly $2,000 per year — for as long as that income year remains in the lookback window.
The Cliff Structure Deserves Attention — But Not Panic
IRMAA isn't graduated. It's a series of sharp cliffs. Cross a threshold by one dollar and you owe the full surcharge for that entire tier for the full year. There's no proportional treatment, no phase-in.
That structure makes precision matter. A couple sitting at $216,000 in MAGI who converts $4,000 has crossed the first IRMAA tier and will owe close to $2,000 in extra Medicare premiums two years from now — on a conversion that probably didn't generate enough in additional tax-free growth to justify that cost in isolation. In a case like that, trimming the conversion to stay just below the threshold is usually the cleaner move.
But the cliff structure doesn't mean IRMAA tiers are always worth avoiding. It means the cost needs to be in the math. For many clients — particularly those with large pre-tax balances, meaningful future RMD exposure, or a surviving spouse scenario on the horizon — paying IRMAA surcharges during a conversion window as part of a deliberate conversion strategy is entirely rational. The surcharge is finite. The tax arbitrage and the downstream benefits can be substantial.
The Case for Converting Even Through an IRMAA Tier
For retirees with significant pre-tax balances, there are often compelling reasons to convert beyond an IRMAA threshold — and they compound on each other. The through-line in each of them is the same: a known, finite IRMAA cost today versus a larger, longer, or less controllable tax burden later.
The core logic of a Roth conversion is paying taxes at a lower rate now to avoid a higher rate later. If today's marginal rate — even with an IRMAA surcharge folded in — is still lower than what you'd face on larger RMDs in your 70s and 80s, the conversion wins on a net basis. IRMAA adds to the cost of converting. It doesn't automatically flip the math.
Clients who've converted meaningful balances into Roth have the opportunity to hold their highest-expected-return assets — growth equities, small cap, international — inside the Roth, where all of that appreciation is permanently tax-free. Meanwhile, the remaining pre-tax accounts can be invested more conservatively, which naturally slows future RMD growth. You're not just shifting the tax character of money. You're deliberately supercharging the bucket where growth costs nothing and putting the brakes on the bucket that will eventually generate mandatory taxable income. Over a 20–30 year retirement, that coordination can produce enormously better after-tax outcomes than a strategy focused purely on staying below an IRMAA threshold.
When one spouse passes, the survivor shifts from filing jointly to filing as a single taxpayer. The tax brackets compress roughly in half. The same income that sat comfortably in the 22% bracket on a joint return can push well into 32% territory on a single return — and the IRMAA thresholds for single filers are also half of what they are for joint filers. A couple with $1.5M or more in pre-tax accounts who hasn't converted aggressively can leave the surviving spouse with decades of large, expensive RMDs on a single return. Paying IRMAA now as a couple is often far cheaper than what the survivor faces alone later.
A growing pre-tax balance means growing RMDs at 73 and beyond. If you don't convert now, the IRS will force distributions later — on their schedule, not yours — and those RMDs will count toward MAGI whether you need the money or not. For many retirees, that means paying IRMAA anyway, just involuntarily, on top of Social Security income and potentially at higher future rates. Converting deliberately today — and accepting a short-term IRMAA surcharge — can reduce the pre-tax balance enough that future RMDs no longer push you into a higher tier permanently. You're choosing to pay IRMAA once on your terms instead of paying it indefinitely on theirs.
When markets are down, your pre-tax account balance is lower — which means you can convert the same number of shares at a lower taxable value. The IRMAA surcharge, if it applies, is based on the dollar amount converted, and that dollar amount is smaller in a down market. The recovery then happens inside the Roth, tax-free. If you would have converted anyway, a down year is a particularly favorable time to do it — and the fixed IRMAA cost as a percentage of the future benefit looks better when the Roth has more room to recover.
Under the SECURE Act, most non-spouse beneficiaries have ten years to empty an inherited IRA — and those distributions are taxable as ordinary income. If you leave a large pre-tax IRA to children who are still working, they're drawing it down in their peak earning years, often in the 32–37% bracket. The tax you would have paid on a conversion — even with IRMAA included — may be substantially less than what your heirs will pay on the same dollars during their most expensive income years. Converting now effectively lets you pay the tax at your rate so they don't have to pay it at theirs.
These aren't niche scenarios. They describe a large share of retired households with meaningful retirement assets. In any one of them, the IRMAA surcharge is a real cost — and it's very often worth paying.
The Two-Year Lag Creates Real Planning Opportunities
The same timing quirk that causes surprises can also be used intentionally.
If you're 62 or younger, conversions you do now will not affect your Medicare premiums at all. For retirees who've already left work but haven't yet started Social Security or Medicare, income is often at its lowest point in the entire retirement arc. That's when conversion is cheapest, and when filling the bracket aggressively makes the most sense.
The years between retirement and Medicare enrollment are frequently the most valuable window for Roth conversions. You have low current income, future RMDs are still accruing, and the IRMAA lookback hasn't locked in yet for the years ahead. That window is narrow and it doesn't come back.
Once you're on Medicare, IRMAA becomes part of the annual conversation. Before executing a conversion, the question is: how will this conversion affect my Medicare premiums, and if so, is it worth it? For some clients in a given year, the answer is to stay below the next tier. For others — those with larger pre-tax balances, widowing risk, or an asset location strategy in play — crossing a tier and paying the surcharge is the right call. The goal is making that decision deliberately, not discovering it two years later.
What To Do With This Information
Calculate your projected MAGI for the year — including Social Security, RMDs, dividends, capital gains, and any other income — and identify where you land relative to each tier boundary. That picture tells you the cost of going further. Then you can decide if it's worth it.
A conversion that fits in the 22% federal bracket might also trigger an IRMAA surcharge. Or it might not. Either way, the total cost of the conversion — income tax plus any Medicare impact two years out — is what should drive the decision, not either number in isolation.
If you're in your early 60s with a few years before enrollment, that window deserves serious attention. Don't drift through it without a deliberate conversion strategy.
Where the converted dollars get invested inside the Roth matters. Holding growth-oriented assets in the Roth and more conservative assets in the remaining pre-tax accounts isn't just portfolio construction — it's a tax strategy that works in the background for decades.
Part of the value of converting is that you're building an account that doesn't generate taxable income in the years ahead. Lower future MAGI means lower future IRMAA exposure — and more flexibility in how you manage income throughout retirement.
Medicare allows IRMAA appeals for qualifying life events — retirement, divorce, death of a spouse, loss of income. A Roth conversion is not a qualifying event. Once the income is reported, the premium follows. Planning ahead is the only real lever.
IRMAA is a real cost and it belongs in every Roth conversion analysis. But it's one variable in a multi-variable problem — not a veto. For retirees with large pre-tax balances, the combination of tax arbitrage, asset location strategy, and widow's penalty hedging often makes conversion through an IRMAA tier the right call. The surcharge is temporary. The benefits can compound for decades.
A conversion strategy that ignores IRMAA is incomplete. So is one that stops the moment IRMAA enters the picture.
The Math Looks Different When It's Your Money
IRMAA, tax brackets, RMDs, asset location — these decisions interact in ways that are easy to underestimate. If you'd like to know what the right conversion strategy actually looks like for your situation, let's work through it together.
Schedule a Discovery Call