For many investors, the accumulation phase of retirement planning is relatively straightforward: contribute consistently, diversify wisely, and let compound interest do the heavy lifting. The goal is simple — build enough assets to one day generate income that matches your lifestyle needs. But what often gets overlooked is what happens after you’ve successfully grown those assets, particularly when large balances are held in pre-tax retirement accounts.
At first glance, a sizable IRA or 401(k) balance may seem like a win — and it is — but once you reach age 73, those funds come with strings attached. Required Minimum Distributions (RMDs) force you to withdraw a certain amount each year, regardless of whether you need the income. And while these distributions may feel like a natural part of retirement, they can have unintended consequences — namely, triggering higher taxes and Medicare premiums due to something called IRMAA (Income-Related Monthly Adjustment Amount).
This article will walk you through the lesser-known pitfalls of RMDs, how IRMAA works, and, most importantly, the strategies available to help reduce or avoid these surcharges altogether.
What Is IRMAA?
IRMAA is an additional surcharge added to Medicare Part B and Part D premiums. These surcharges are triggered if your Modified Adjusted Gross Income (MAGI) exceeds certain thresholds. What makes it particularly painful is that IRMAA brackets are “all-or-nothing” — meaning if your income is just $1 over the limit, you’re bumped into the next premium tier, paying the full increase like someone at the top of that range.
To make things even trickier, there’s a two-year lookback: your 2025 Medicare premiums are based on your 2023 income.
Case Study:
Mr. Whitaker is 72 and retired.
He lives modestly, but in 2023, he took an $80,000 RMD from his IRA, which pushed his MAGI up to $125,000.
In 2025, he receives a notice from Social Security:
His Medicare Part B premium jumps to $349.40/month, and his Part D IRMAA surcharge is $33.30, totaling over $100/month more, or $1,400 per year, in surcharges.
He had no idea he’d crossed an income threshold — and he didn’t feel the effects until two years later.
Strategies to Help Avoid IRMAA Surprises
Roth Conversions
Roth conversions enable investors to transfer pre-tax dollars into a Roth IRA during years when their income is lower — ideally before required minimum distributions (RMDs) begin. This means you:
Pay taxes now, at potentially lower rates
Reduce your future RMDs
Shrink your tax-deferred balance, which helps control future MAGI
Think of it as proactively paying taxes on your terms, instead of waiting for the IRS to tell you how much to withdraw, possibly when you’re in a higher tax bracket.
Qualified Charitable Distributions (QCDs)
For retirees who don’t need their RMDs to support their lifestyle, QCDs are a powerful tool. Instead of taking a taxable RMD, you can donate up to $100,000 per year directly from your IRA to a qualified 501(c)(3) charity.
This satisfies your RMD without increasing your taxable income, helping you avoid IRMAA surcharges while supporting causes you care about.
Many retirees can live comfortably on:
Low lifestyle expenses
Other income sources (Social Security, pensions, investment income)
This means their pre-tax accounts continue to grow, eventually leading to larger Required Minimum Distributions (RMDs) and higher tax implications. A QCD lets you break your RMD into smaller gifts across multiple charities. As long as the distribution goes directly from the IRA to the charity, it won’t affect your MAGI or Medicare premiums.
Delaying Social Security
Social Security counts as taxable income (up to 85%) and contributes to your Modified Adjusted Gross Income (MAGI), which influences your Medicare Part B and Part D premiums. By delaying social security, you can strategically create a “low-income window,” which is ideal for the following strategies:
Capital gains harvesting
Strategic drawdown from taxable investments
These strategies can be complex in application, and the best approach is highly individual, often changing year to year based on your income sources, spending needs, and tax situation.
If you're unsure how this might apply to your retirement plan or would like to explore ways to minimize IRMAA exposure, schedule a meeting with one of our financial advisors to discuss strategies tailored to your specific needs, financial situation, and goals. We’re happy to help you plan and keep more of your money working for you, not against you, with Medicare surcharges.
The RMD–IRMAA Trap: How to Protect Yourself from Surprise Medicare Hikes
June 16, 2025
Clay Reynolds
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