A Roth conversion can be one of the smartest moves you make in retirement, but if it pushes your income above certain thresholds, Medicare can come back two years later and charge you significantly more for Part B and Part D coverage. This delayed penalty is called IRMAA, and understanding how its two-year lookback works is essential before you convert a single dollar. The good news is that with a little planning, you can often have the tax benefits of a Roth conversion without an unwelcome surprise on your Medicare bill.
What Is IRMAA and Why Does It Follow You Into Medicare
IRMAA stands for Income-Related Monthly Adjustment Amount. It is a surcharge that Medicare adds to your standard Part B and Part D premiums when your income exceeds certain thresholds. In 2026, the standard Part B premium is $185.00 per month, but IRMAA surcharges can push that figure to $628.90 per month for the highest earners. Part D premiums carry their own surcharge on top of whatever your specific drug plan charges.
What catches many retirees off guard is that Medicare does not look at what you earned this year. It looks at your Modified Adjusted Gross Income, or MAGI, from two years ago. So your 2026 Medicare premiums are based on your 2024 tax return. A Roth conversion you completed in 2024, even one that felt modest at the time, could be raising your premiums right now.
This is not a punishment. It is simply how the system is structured, and knowing the rules gives you real leverage. Most people who get hit by IRMAA for the first time simply were not warned in advance, and that is entirely fixable going forward.
How the Two-Year Lookback Works in Plain Language
Every year, the Social Security Administration reviews your most recently available federal tax return to determine whether you owe an IRMAA surcharge. Because tax returns take time to file and process, the most recent year available is typically two years prior. This is the two-year lookback window that retirement planners talk about.
Here is a concrete example. If you converted $80,000 from a traditional IRA to a Roth IRA in 2025, that $80,000 is added to your other income and reported on your 2025 tax return. Social Security will use that 2025 return when calculating your 2027 Medicare premiums. Depending on your total MAGI, you could move into a higher IRMAA bracket and pay hundreds of dollars more per month for Part B and Part D combined.
The five IRMAA brackets in 2026 begin when individual MAGI exceeds $106,000 and when joint MAGI exceeds $212,000. Surcharges increase at $133,000, $167,000, $200,000, and $500,000 for individuals. Even landing in the first bracket adds $74.00 per month to your Part B premium alone, which is $888.00 extra per year.
Why Roth Conversions Trigger IRMAA More Than People Expect
A Roth conversion is counted as ordinary income in the year you complete it. If you were already receiving Social Security benefits, required minimum distributions, pension income, or investment returns, a conversion stacks on top of all of that. The combined total is your MAGI, and that is the number Medicare judges you by.
Consider a retired couple filing jointly in 2025 with $150,000 in combined income from Social Security, a small pension, and dividends. They decide to convert $70,000 from a traditional IRA to a Roth because they want to reduce future RMDs and leave a tax-free inheritance. Their MAGI for 2025 is now $220,000. In 2027, they will owe the second IRMAA tier surcharge, adding roughly $263.70 per month per person to their Medicare costs, or about $6,329 extra for the year as a couple.
That does not make the conversion wrong. It does mean the full cost needs to be part of the calculation. A financial planner who specializes in retirement income can model out whether the long-term Roth benefit outweighs the two-year Medicare surcharge, and in many cases it still does.
Smart Conversion Strategies That Respect the IRMAA Thresholds
The most effective approach is to convert in amounts that keep your MAGI just below an IRMAA bracket boundary. In 2026, that means an individual would want to stay under $106,000 in total MAGI if they want to avoid surcharges entirely, or under $133,000 to remain in the first and lowest surcharge tier. Married couples filing jointly have thresholds that are exactly double those figures.
Many retirees benefit from a multi-year conversion strategy, sometimes called a laddered conversion. Instead of converting $100,000 in one tax year, they convert $30,000 to $40,000 each year over several years. This keeps annual MAGI below triggering thresholds, spreads the tax liability over multiple lower-rate years, and gradually shifts money into a tax-free Roth account without triggering disproportionate Medicare surcharges.
The window between retiring and claiming Social Security is often the most valuable time for this strategy. If you retired at 63 and plan to claim at 70, you may have seven years of relatively lower income during which you can convert meaningful amounts at reduced tax rates without Medicare exposure being an issue yet. Once Medicare begins at 65, the calculus changes and bracket management becomes critical.
How to Appeal an IRMAA Determination After a Conversion Year
If a large Roth conversion has already pushed you into a higher IRMAA bracket and your income has since returned to a lower level, you may be able to appeal the surcharge through a process called a Life-Changing Event appeal. Medicare officially recognizes several qualifying events, including retirement, divorce, and the death of a spouse, that allow Social Security to use a more recent tax year instead of the two-year-old return.
Unfortunately, a Roth conversion by itself is not a qualifying life-changing event. However, if you retired in the same year as your conversion, the retirement can serve as the qualifying event, and Social Security may agree to use a more recent year’s income, which would reflect your lower post-retirement earnings rather than the elevated conversion year. The form to use is SSA-44, and you will need documentation of your current income estimate.
Submitting an SSA-44 is worth attempting even if you are uncertain about eligibility. Approval can reduce your monthly premium significantly, and the process, while paperwork-intensive, is free. A benefits counselor through your State Health Insurance Assistance Program, known as SHIP, can help you complete the form at no cost.
Working With a Planner to Coordinate Roth Conversions and Medicare
Medicare premium planning and Roth conversion strategy are rarely discussed together, but they belong in the same conversation. A fee-only financial planner or a CPA with retirement income expertise can run projections that show you the exact MAGI thresholds you need to stay under and the point at which a conversion’s long-term benefit still justifies a temporary IRMAA hit.
For 2026 and 2027 planning, the projection needs to account for Social Security income, RMDs from traditional IRAs or 401(k) accounts, any part-time earnings, capital gains from taxable brokerage accounts, and the conversion amount itself. All of these flow into MAGI. Missing even one income source can throw off the estimate and lead to an unexpected bracket jump.
If you are working with an advisor who handles investments but has never brought up IRMAA in the context of your Roth conversion plan, it may be time to ask directly. The question is simple: how will this conversion affect my Medicare premiums two years from now? The answer to that question, specific and grounded in your actual numbers, is exactly the kind of guidance that protects your retirement budget without sacrificing long-term strategy.
Frequently Asked Questions
Which year’s income does Medicare use to set my 2026 Part B premium?
Medicare uses your 2024 Modified Adjusted Gross Income to determine your 2026 Part B and Part D premiums. This two-year lookback means any Roth conversion you completed in 2024 is reflected in what you pay for Medicare coverage right now in 2026. Planning conversions with this lag in mind is the key to avoiding unwelcome surcharges.
What are the 2026 IRMAA income thresholds for individuals?
In 2026, IRMAA surcharges begin for individuals with MAGI above $106,000 and for married couples filing jointly above $212,000. Additional tiers apply at $133,000, $167,000, $200,000, and $500,000 for individuals. The highest bracket adds approximately $443.90 per month to the standard Part B premium, making threshold awareness essential for anyone planning a Roth conversion.
Can I appeal an IRMAA surcharge caused by a Roth conversion?
A Roth conversion alone is not a qualifying life-changing event for an IRMAA appeal. However, if you also retired in that same tax year, your retirement qualifies. You would file form SSA-44 with Social Security and provide an estimate of your current lower income. If approved, Social Security uses a more recent year’s income, which may eliminate or reduce your surcharge.
How much extra will I pay if my Roth conversion pushes me into the first IRMAA bracket?
Landing in the first IRMAA tier in 2026 adds $74.00 per month to your Part B premium and a separate surcharge to your Part D plan. For an individual, that is $888.00 per year in additional Part B costs alone. Couples filing jointly both pay the surcharge individually, so the combined annual impact is $1,776.00 just from the first bracket entry.
Is there a best time of year to complete a Roth conversion with IRMAA in mind?
Converting earlier in the year gives you more time to estimate your full annual income before committing to a conversion amount. Many planners recommend waiting until October or November, when you have a clear picture of dividends, capital gains distributions, and other variable income. That window lets you fine-tune the conversion size to stay under a specific IRMAA threshold with much greater accuracy.
Does a Roth conversion affect Medicare Part D as well as Part B?
Yes. IRMAA applies to both Part B and Part D premiums. The Part D surcharge in 2026 ranges from $13.70 to $85.80 per month depending on your income bracket, added on top of whatever your specific drug plan charges. If you are in the first IRMAA bracket, you pay the base Part D surcharge of $13.70 monthly in addition to your elevated Part B premium.
The IRMAA two-year lookback is one of those retirement details that feels complicated until someone walks you through it clearly, and once you understand it, you have a real tool for protecting your Medicare budget while still growing a tax-free Roth account over time. The numbers are specific, the thresholds are knowable, and a well-timed conversion strategy can give you the best of both outcomes. If you have not yet reviewed your Roth conversion plan alongside your projected Medicare premiums, talking with a fee-only planner or reaching out to your local SHIP counselor is a strong and cost-free next step.