"Medicare's Income-Related Monthly Adjustment Amount uses a two-year MAGI lookback. A retiree turning 65 in 2031 will have Part B and Part D premiums priced off 2029 income. Any Roth conversion executed at age 63 or later lands inside that lookback window and feeds directly into the surcharge formula."
"Standard Part B in 2026 runs $202.90 a month. The top IRMAA tier pushes that to roughly $689.90 a month, a hit of about $5,844 a year per person on top of normal premiums, with a similar Part D adjustment layered on. A single $150,000 conversion executed at the wrong age can quietly cost five figures in Medicare premiums before the first RMD even arrives."
"That is why the actionable window is ages 60 through 62. Conversions completed by December 31 of the year he turns 62 fall outside the IRMAA pricing year for his first Medicare enrollment. Wait one year too long and the math inverts."
"Using 2026 single brackets (12% to $48,475, 22% to $103,350, 24% to $197,300) and a standard deduction of roughly $15,200 under 65, he can convert enough traditional 401(k) dollars each year to bring taxable income up to the top of the 22% bracket without spilling into 24%. Because he is living off the taxable account, his ordinary income before any conversion is close to zero."
A retiree with a traditional 401(k) plans to claim Medicare at 65 and faces IRMAA Medicare premium surcharges based on a two-year MAGI lookback. Conversions performed at age 63 or later can increase MAGI inside the lookback window and raise Part B and Part D premiums for the first Medicare enrollment period. The cost can be thousands of dollars per year, depending on the IRMAA tier. To avoid this, conversions should be completed by December 31 of the year the retiree turns 62. The strategy uses multiple years of Roth conversions to fill the 22% federal bracket without reaching the 24% bracket, leveraging low ordinary income while living from a taxable account.
Read at 24/7 Wall St.
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