Roth Conversions and IRMAA Surcharges

Roth conversions are one of the most powerful tools in a retiree's tax planning arsenal. By moving money from a Traditional IRA to a Roth IRA, you pay tax now in exchange for tax-free growth and withdrawals later — and you eliminate future required minimum distributions (RMDs) on the converted amount.[4]

But there's a catch that many retirees overlook: every dollar you convert is added to your modified adjusted gross income (MAGI), and Medicare uses that MAGI to determine your IRMAA surcharges. A poorly timed or oversized conversion can trigger thousands of dollars in additional Medicare premiums — turning what should be a tax-saving strategy into an expensive mistake.

The IRMAA-Roth Connection: Why Timing Matters

IRMAA uses a 2-year lookback rule. Your 2024 MAGI determines your 2026 Medicare premiums. Your 2025 MAGI sets your 2027 premiums. This delay is both a trap and an opportunity.[2]

The trap: A retiree who does a $100,000 Roth conversion in 2024 may have forgotten about it by the time their 2026 Medicare bill arrives with an unexpected IRMAA surcharge. The opportunity: because you know the lookback window in advance, you can plan conversions in years where IRMAA either does not apply (before age 63, since Medicare starts at 65) or where the conversion amount is carefully sized to stay within a specific tier.

For 2026, the IRMAA thresholds for married filing jointly start at $218,000 (base, no surcharge) and increase through five tiers up to $750,000.[1] For single filers, the thresholds start at $109,000 and top out at $500,000.

How a Roth Conversion Pushes You Into Higher IRMAA Tiers

Consider a married couple filing jointly with the following 2024 income:

• Social Security benefits: $48,000
• Pension: $30,000
• Investment income (dividends, interest): $15,000
• Tax-exempt interest: $5,000

Their base MAGI before any Roth conversion is approximately $98,000 (AGI of $93,000 + $5,000 tax-exempt interest). Well below the $218,000 IRMAA threshold — no surcharge.

Now suppose they do a $125,000 Roth conversion. Their MAGI jumps to approximately $223,000, pushing them into IRMAA Tier 1. The result: each spouse pays an extra $81.20/month for Part B and $14.50/month for Part D. Combined annual cost: $2,296.80.[1]

If they had limited the conversion to $120,000, their MAGI would have been $218,000 — right at the threshold. They'd save the entire $2,296.80 IRMAA bill while still converting a substantial amount to Roth.

The “IRMAA Tax” on Roth Conversions

It's useful to think of IRMAA as an additional tax on each dollar of Roth conversion that crosses a tier boundary. The “IRMAA tax rate” is the total annual surcharge increase divided by the amount of conversion that triggered it.

In the example above, the couple crossed the $218,000 threshold by $5,000. Their additional IRMAA cost was $2,296.80. That's an effective 45.9% IRMAA penalty rate on that last $5,000 of conversion — on top of the ordinary income tax they already paid on the full conversion. When you add the 22% or 24% federal bracket, the true marginal rate on those dollars can exceed 65%.

However, this penalty only applies to the dollars that cross the tier boundary. If you size your conversion to land exactly at a tier threshold, the IRMAA tax on the conversion is zero. This is why precision in conversion sizing matters so much.

Sizing Conversions: The Fill-the-Tier Strategy

The most tax-efficient approach is to convert enough to fill a tier without crossing into the next one. Here is a step-by-step method:[3]

Step 1: Estimate your base MAGI. Add up all non-conversion income sources: Social Security, pensions, RMDs, investment income, rental income, and tax-exempt interest. This is your starting MAGI.

Step 2: Identify your target tier.Find the IRMAA threshold you want to stay below (or the tier whose surcharge you're willing to accept). For MFJ, the key thresholds are $218,000 (no surcharge), $274,000 (Tier 1), $342,000 (Tier 2), $410,000 (Tier 3), and $750,000 (Tier 4).

Step 3: Calculate your conversion room. Subtract your base MAGI from your target threshold. The result is the maximum Roth conversion you can do without crossing into the next IRMAA tier.

Step 4: Account for secondary effects. Remember that the Roth conversion income may also push more of your Social Security benefits into taxability (the Social Security tax torpedo), further increasing your AGI. Build in a buffer of a few thousand dollars to account for this interaction.

When Paying IRMAA Is Worth It

IRMAA should not be avoided at all costs. In many cases, paying IRMAA for a year or two is a good investment if the Roth conversion delivers larger long-term savings. The key question is: does the lifetime tax savings from the conversion exceed the IRMAA cost?

Consider these scenarios where paying IRMAA is often worthwhile:

Large Traditional IRA balances with looming RMDs.A retiree with $1 million in a Traditional IRA will face large RMDs starting at age 73, potentially pushing them into IRMAA tiers permanently. Doing aggressive Roth conversions at ages 63–72 — even if they trigger temporary IRMAA — can reduce the IRA balance enough that RMDs stay below IRMAA thresholds for the rest of their life.

Years where you're already in a tier.Once you've crossed into Tier 1, you might as well convert up to the Tier 2 boundary. You're already paying the Tier 1 surcharge whether you convert $1 over the line or $55,999 over it (for MFJ, the gap between $218,001 and $274,000). Fill the tier.

The widow's tax penalty is likely. If one spouse is likely to predecease the other, the surviving spouse will file as single with compressed tax brackets and IRMAA thresholds. Converting while married filing jointly — with higher thresholds — can reduce the tax burden on the surviving spouse significantly.

Multi-Year Conversion Planning

The most effective Roth conversion strategies span multiple years. Rather than doing one massive conversion, spread conversions across 5–10 years to stay in lower IRMAA tiers each year.[3]

For example, a couple with $800,000 in Traditional IRA assets might convert $80,000 per year for 10 years rather than $400,000 in two years. The annual approach keeps MAGI below IRMAA thresholds (or in Tier 1 at most), while the lump-sum approach could push them into Tier 3 or higher — costing an extra $4,620 to $6,355 per person per year in surcharges.

The golden windowfor Roth conversions is typically ages 59–72: after retirement (lower earned income) but before RMDs begin at 73. If you're also before age 63, conversions won't trigger IRMAA at all because you won't be on Medicare during the 2-year lookback impact period.

Common Mistakes to Avoid

1. Ignoring the lookback entirely. Many retirees do a Roth conversion without realizing it will affect their Medicare premiums two years later. Always check where your post-conversion MAGI will land against IRMAA thresholds.

2. Assuming you can appeal. Roth conversions are voluntary and do not qualify as a life-changing event under Form SSA-44. You cannot appeal an IRMAA surcharge triggered by a planned conversion.[5]

3. Forgetting both spouses.On a joint return, both spouses' income counts. If one spouse does a Roth conversion, it increases the household MAGI that determines IRMAA for both spouses who are on Medicare.

4. Not accounting for the Social Security torpedo. A large Roth conversion can push more Social Security benefits into taxability, which further increases your AGI — and therefore your MAGI for IRMAA. The interaction between the torpedo and IRMAA can make the true cost of a conversion higher than expected.

Key Takeaways

Roth conversions and IRMAA are deeply intertwined. Every dollar of conversion increases MAGI, and every IRMAA tier boundary represents a potential cost cliff. The optimal strategy is not to avoid conversions — it is to size them precisely, time them strategically, and weigh the short-term IRMAA cost against the long-term benefit of tax-free Roth growth and reduced RMDs.

Use the IRMAA and Roth conversion calculators to model your specific situation. The math is different for every household, and the right conversion amount depends on your age, income sources, IRA balance, filing status, and planning horizon.