"Medicare premiums are income-tested, but the clock runs on a two-year delay. Your modified adjusted gross income (MAGI) from 2026 determines what you pay for Part B and Part D in 2028."
"Without the conversion, this retiree's MAGI sits at $60,000, well below the threshold, and she pays the standard Part B premium of about $203 a month with no Part D surcharge."
"The IRMAA cliff works as a step function. Going one dollar over $109,000 triggers the entire tier-1 surcharge."
A retiree converted $60,000 from her traditional IRA, believing it was a smart tax move. However, this increased her modified adjusted gross income (MAGI) to $120,000, triggering a Medicare premium surcharge. The surcharge, based on a two-year delay, resulted in an additional $1,116 in costs. The retiree's situation illustrates how Roth conversions can lead to unexpected financial consequences, particularly regarding Medicare premiums, which are income-tested and can significantly impact retirement budgets.
Read at 24/7 Wall St.
Unable to calculate read time
Collection
[
|
...
]