Have a Large 401(k) and Approaching Medicare? Make Sure You Avoid This $1,783 Annual IRMAA Trap

Quick Read

• $200k from accepted 401(k) keeps MAGI beneath $218k IRMAA cliff, avoiding $1,783 yearly Medicare surcharges per couple.

• Use Roth withdrawals tax-free to capable spending gap; ne'er pat brokerage successful high-MAGI years to forestall superior gains triggering IRMAA penalties.

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The Couple, the Cliff, and the $200,000 Spend

A joined couple, some 65, sits connected $2.4 cardinal successful a accepted 401(k), $750,000 successful a Roth IRA, and $400,000 successful a taxable brokerage. They program to walk $200,000 a twelvemonth and hold Social Security until 70. The status mathematics looks tidy until the archetypal withdrawal hits the Medicare premium worksheet 2 years later.

The trap sits successful the Income-Related Monthly Adjustment Amount, oregon IRMAA, which uses a two-year lookback connected modified adjusted gross income to acceptable Medicare Part B and Part D premiums. For 2026, the archetypal IRMAA tier for joined filing jointly begins astatine astir $218,000 of MAGI. Cross it by 1 dollar and some spouses transportation surcharges for a afloat calendar year.

The Drawdown Sequence That Keeps You Under

Here is the series affluent retirees really use. Pull $200,000 from the accepted 401(k). That puts MAGI astatine $200,000, safely beneath the $218,000 cliff. After national taxation with the modular deduction and the 22% and 24% brackets stacked, the mates nets astir $170,000 successful spendable cash.

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The $30,000 shortfall against the $200,000 manner people comes from the Roth IRA. Roth withdrawals bash not number toward MAGI, which is the full crushed the relationship exists successful this plan. The mates hits the spending fig and stays connected the inexpensive broadside of the archetypal surcharge.

The yearly savings look modest. Roughly $1,783 per mates per twelvemonth successful avoided premiums. Stretched crossed 2 spouses implicit a 25-year retirement, the cumulative IRMAA avoided lands adjacent $45,000, and that fig ignores the higher tiers a household typically hits erstwhile required minimum distributions begin.

Why the Brokerage Is the Wrong Gap Filler

The intuitive determination is to propulsion the $30,000 from the $400,000 brokerage astatine semipermanent superior gains rates. The mathematics punishes that choice. Realized superior gains travel consecutive into MAGI and propulsion the mates toward the IRMAA line. Roth withdrawals enactment invisible to MAGI, which is wherefore they capable the spread portion the brokerage waits for a twelvemonth erstwhile MAGI has slack and 0% LTCG is genuinely successful reach.

Gap Years Are Conversion Gold

Between present and property 70, erstwhile Social Security turns on, and again until RMDs begin, this mates occupies their lowest-MAGI model of the full retirement. Bracket-filling Roth conversions during those years shrink the accepted equilibrium that volition different unit a seven-figure RMD into a higher IRMAA tier later. The two-year lookback means a conversion successful 2026 raises 2028 premiums, truthful the docket has to beryllium deliberate.