How to Avoid Medicare IRMAA: Tips for High-Income Retirees
How to Avoid IRMAA
In retirement, high-income individuals often encounter an unexpected cost: Medicare IRMAA (Income-Related Monthly Adjustment Amount). This surcharge can significantly increase your Medicare Part B and D premiums. If you’re a retiree who spent years building a high salary, accumulating wealth, or cashing in stock options, you may be subject to IRMAA penalties—unless you plan ahead.
This guide explains how IRMAA works, who it impacts, and most importantly, how to reduce or avoid it. The strategies shared here are especially relevant for WFP Tax Partners’ clients: high-net-worth individuals, executives, physicians, and business owners across the U.S.
What Is IRMAA and Who Pays It?
IRMAA is a surcharge applied to your Medicare premiums if your Modified Adjusted Gross Income (MAGI) exceeds thresholds set annually by the Social Security Administration (SSA). Your MAGI is generally your AGI plus tax-exempt interest (like municipal bond income).
For Medicare purposes, SSA uses your tax return from two years prior to determine whether you owe IRMAA. So your 2025 Medicare premiums are based on your 2023 income.
What Income Level Triggers IRMAA? (IRMAA Brackets Explained)
In 2025, IRMAA applies if your 2023 MAGI exceeds:
- $106,000 (single filer)
- $212,000 (married filing jointly)
Exceeding these thresholds—even by a dollar—pushes you into a higher IRMAA bracket with no phaseout.
| MAGI (Single) | MAGI (Married Filing Jointly) | Monthly Part B Premium | Monthly Part D Surcharge |
| $106,000 or less | $212,000 or less | $174.70 | $0 |
| $106,001–133,500 | $212,001–267,000 | $244.60 | $12.90 |
| $133,501–166,000 | $267,001–320,000 | $349.40 | $33.30 |
| $166,001–199,000 | $320,001–400,000 | $454.20 | $53.80 |
| $199,001+ | $400,001+ | $559.00+ | $74.20+ |
There’s no gradual ramp-up. IRMAA is imposed in full if you cross the threshold.
The Two-Year Look-Back Rule and Life-Changing Events
Since IRMAA is based on income from two years ago, many retirees are penalized based on their last high-income working year. Fortunately, SSA allows IRMAA appeals in the case of certain qualifying life-changing events, such as:
- Retirement
- Marriage
- Divorce
- Death of a spouse
- Loss of income-producing property
If your income drops due to a qualifying event, you can file Form SSA-44 to request a reduction in your IRMAA.
How to Avoid Medicare’s IRMAA Premium Surcharge
Avoiding IRMAA requires intentional income management. Here are eight proven strategies:
1. File an IRMAA Appeal
If you’ve experienced a life-changing event like retirement, marriage, divorce, or the death of a spouse, you can appeal your IRMAA. SSA will consider your more recent income rather than using the default two-year-old tax return. To initiate an appeal, submit Form SSA-44 with proper documentation. Make sure to include a detailed explanation and proof of the event (e.g., a letter from your employer confirming retirement).
For retirees, this strategy can prevent you from being penalized based on your peak career income. It’s a simple but powerful first step for those who qualify.
2. Time Roth Conversions
Roth conversions are a key planning opportunity—but they can push your income over IRMAA thresholds if done all at once. Instead of converting a large traditional IRA balance in one tax year, spread the conversions across multiple years. Ideally, do this during the “retirement window”—after retirement but before you begin Social Security or Required Minimum Distributions (RMDs).
By carefully managing the size of each conversion, you can reduce future RMDs while keeping your income below the next IRMAA bracket. Consider running multi-year tax projections to decide the best conversion schedule.
3. Use Qualified Charitable Distributions (QCDs)
If you’re age 70½ or older, you can donate directly from your IRA to a qualified charity. These Qualified Charitable Distributions count toward your RMD but do not count toward MAGI. You can give up to $100,000 per year per individual (or $200,000 per couple).
This strategy is perfect for charitably inclined retirees who don’t itemize deductions. It lowers your MAGI, which helps you avoid IRMAA and may reduce your overall tax liability.
4. Maximize Tax-Deferred Contributions
If you or your spouse are still earning income, consider maxing out contributions to traditional 401(k)s or IRAs. These reduce your AGI and therefore your MAGI.
For 2025, those over age 50 can contribute up to $30,000 to a 401(k) and up to $7,500 to a traditional IRA. Every dollar you defer reduces your exposure to IRMAA and keeps more money in your pocket.
5. Withdraw from Roth IRAs and HSAs
Withdrawals from Roth IRAs and HSAs are not included in MAGI. These are great accounts to draw from when you want to supplement income without increasing your Medicare premiums.
If you’ve built up these accounts in your working years, prioritize withdrawals here in IRMAA-sensitive years. This gives you a flexible, tax-free income source to manage your bracket.
6. Defer RMDs with a QLAC
A Qualified Longevity Annuity Contract (QLAC) allows you to defer a portion of your traditional IRA or 401(k) up to age 85. In 2025, you can invest up to $200,000 in a QLAC. The amount invested is excluded from your RMD calculation until payouts begin.
This strategy smooths out your income across retirement and can help you stay below IRMAA limits in your 70s. It’s particularly useful for those who expect higher taxable income later in retirement.
7. Spread Capital Gains Over Multiple Years
Selling appreciated assets like stock, real estate, or a business can spike your income and trigger IRMAA. Instead of selling everything in one year, use installment sales or stagger sales across multiple years.
Installment sales allow you to spread income over several tax years, while charitable remainder trusts (CRTs) can help defer or reduce capital gains exposure. Work with a tax advisor to structure these sales efficiently.
8. Coordinate With Social Security Timing
Delaying Social Security benefits until age 70 not only increases your monthly check but also creates an income gap you can use to your advantage. During the delay window, you can:
- Convert traditional IRAs to Roth IRAs
- Take taxable withdrawals at low rates
- Avoid IRMAA surcharges before Social Security income kicks in
This coordination can be one of the most effective ways to optimize retirement income and minimize Medicare premium surcharges.
State-Level Tax Planning (New Jersey Example)
In New Jersey, qualified retirees can exclude up to $100,000 of retirement income from state tax if their total income falls below $150,000. Strategically managing income may allow IRMAA and NJ state tax benefits simultaneously.
Use Tax-Free Municipal Bond Income Cautiously
While municipal bond interest is federal tax-free, it is included in MAGI for IRMAA purposes. If your strategy involves munis, know they can still trigger Medicare surcharges.
Avoiding IRMAA is important, but it shouldn’t override all tax planning. Sometimes it makes sense to accept IRMAA for a year in order to gain long-term tax benefits, especially with Roth conversions or asset sales.
External Resources
Plan Ahead to Keep IRMAA in Check
IRMAA doesn’t have to be an unavoidable penalty. With careful income management, Roth conversion timing, and use of tax-advantaged tools like QCDs and QLACs, you can reduce or even eliminate this costly surcharge.
At WFP Tax Partners, we specialize in helping high-income retirees build tax-efficient income plans. Our proactive approach identifies IRMAA triggers early—and gives you the tools to stay ahead of them.
Learn more about our tax planning services or schedule a consultation today. Don’t let Medicare surprises derail your retirement.
Frequently Asked Questions
- What income level triggers IRMAA?
For 2025, $106,000 MAGI for single filers or $212,000 for married couples triggers IRMAA. - Do IRA contributions reduce IRMAA?
Yes, deductible IRA contributions reduce AGI and MAGI, helping avoid IRMAA. Roth IRA contributions do not. - Does IRMAA ever go away?
Yes. It is recalculated annually. If your income falls below the threshold, your surcharge will drop or disappear. - Is retirement a life-changing event for IRMAA?
Yes. SSA recognizes retirement as a valid reason to appeal IRMAA using Form SSA-44. - What happens if I miss the IRMAA deadline?
You can still appeal during the current year or wait for SSA to automatically reassess based on a new tax return. - Can capital gains cause IRMAA?
Absolutely. A large capital gain can raise MAGI, triggering IRMAA. Plan to spread or offset gains where possible.