A Roth conversion can be one of the smartest moves you make in retirement, but if you are on Medicare or about to enroll, there is a timing detail that catches thousands of retirees completely off guard every year. The IRS reports your income to Medicare with a two-year delay, which means a large conversion you do in 2026 will show up in your Medicare premiums in 2028. Understanding exactly how that lookback works can save you hundreds or even thousands of dollars a year.
What Is IRMAA and Why Should Roth Converters Care
IRMAA stands for Income-Related Monthly Adjustment Amount. It is a surcharge that Medicare adds on top of 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 a single filer whose modified adjusted gross income exceeded $106,000 in 2024 is already paying significantly more. The surcharges are tiered, and at the highest bracket a married couple can pay more than $6,000 extra per year combined just for Part B.
Roth conversions matter here because the entire converted amount is counted as ordinary income in the year you convert. If you convert $80,000 in a single calendar year, that $80,000 lands on your tax return and flows directly into the MAGI calculation that Medicare will use two years later. A retiree who carefully kept income low all year can inadvertently cross an IRMAA threshold with one conversion decision made in December.
The good news is that IRMAA is not permanent. Each year Medicare recalculates your premium based on the most recent tax return available, so a spike in one year does not follow you forever. Knowing that gives you real planning power.
How the Two-Year Lookback Works in Plain Language
Medicare uses your tax return from two years prior to set your current-year premium. In 2026, Social Security Administration is looking at your 2024 tax return to determine whether you owe an IRMAA surcharge this year. In 2027 they will look at your 2025 return. In 2028 they will look at your 2026 return. This is why a Roth conversion you execute today in 2026 will not hit your Medicare bill until January 2028.
The specific IRMAA income brackets for 2026 begin at $106,000 for single filers and $212,000 for married couples filing jointly. Once your MAGI clears that first threshold, Part B surcharges start at $74.00 extra per month per person. The brackets continue upward through five tiers, with the top tier applying to singles above $533,000 and couples above $1,066,000. Even landing in the first surcharge tier costs a couple an additional $1,776 per year.
Because the lookback reaches back exactly two years, a retiree who converts aggressively at age 63 before enrolling in Medicare at 65 can sidestep IRMAA entirely for those conversion years, since Medicare will not be paying attention yet. But once you are enrolled, every conversion year feeds directly into a future premium year.
Real Numbers: What a Conversion Could Cost You in 2028
Imagine a married couple, both age 67 in 2026, with combined Social Security and pension income of $90,000. Their MAGI sits comfortably below the $212,000 joint threshold, so they owe no IRMAA surcharge. They decide to convert $130,000 from a traditional IRA to a Roth IRA in 2026, pushing their 2026 MAGI to $220,000. That amount clears the first IRMAA threshold by $8,000.
In 2028, when SSA reviews their 2026 return, both spouses will be placed in the first IRMAA tier. Each will pay an additional $74.00 per month for Part B, totaling $148 extra per month or $1,776 extra for the year as a couple. If the conversion had pushed them into the second tier, above $266,000 for joint filers, the surcharge jumps to $184.20 extra per month per person, costing the couple over $4,420 more in 2028 alone.
None of this means the conversion was wrong. A $130,000 Roth conversion eliminates future required minimum distributions and can protect heirs from decades of tax drag. The question is whether the math of the surcharge is priced into the decision. Running the numbers before December 31 of any conversion year is what separates a smart move from an expensive surprise.
Strategies to Convert Smartly Without Tripping IRMAA
The most effective approach is bracket-targeted converting, which means converting only enough each year to fill the space between your current MAGI and the next IRMAA threshold. If your baseline income is $160,000 as a married couple, you have $52,000 of room before crossing the first surcharge tier at $212,000. Converting $50,000 annually over several years can shift enormous sums to Roth while staying just under the wire.
Another strategy is to use years with large deductions, such as a year with significant medical expenses exceeding 7.5 percent of AGI or a major charitable contribution, to absorb a larger conversion without net MAGI damage. A qualified charitable distribution from an IRA, allowed once you reach age 70 and a half, reduces your taxable IRA balance without adding to MAGI at all, making it a parallel tool that works alongside Roth conversions.
Timing conversions early in the year also matters. If you convert in January rather than December, you have eleven more months of visibility into your total annual income and can adjust the conversion amount before year end. Working with a fee-only financial planner who specializes in Medicare and retirement income lets you model multiple scenarios with actual 2026 bracket numbers rather than estimates.
How to Appeal an IRMAA Surcharge After a Big Conversion Year
If a Roth conversion in a prior year has already landed you in an IRMAA bracket and your income has since dropped significantly, you have the right to appeal using Form SSA-44. This form is specifically designed for life-changing events such as retirement, divorce, or the death of a spouse, but it does not cover a planned Roth conversion on its own because the IRS and SSA do not consider a voluntary transaction a qualifying life event.
However, if you retired in 2026 and your income will be substantially lower in 2027 than the return Medicare is currently using from two years back, you can request that SSA use a more recent tax year or provide an estimate of your current income. This appeal process, when approved, can eliminate or reduce the surcharge for the current benefit year. You can file in person at any Social Security office or submit the form by mail with supporting documentation.
The lesson is that IRMAA is not necessarily final even when it hits. If your situation changed, act quickly because appeals are more likely to succeed when filed early in the calendar year rather than in the fall when the premium year is nearly over.
Coordinating Roth Conversions With Your Spouse and Beneficiaries
For married couples, IRMAA planning is a team sport. Both spouses are assessed individually, but the income threshold used is based on your combined MAGI when you file jointly. A conversion that pushes one spouse past a bracket boundary raises both spouses into the surcharge tier simultaneously, effectively doubling the annual cost. That reality makes joint income modeling essential before any conversion is finalized.
Beneficiaries deserve a seat at the planning table too. Adult children who will inherit a large traditional IRA may face the 10-year rule, which requires them to fully draw down inherited IRAs within a decade. Depending on their income during those years, they could pay taxes at rates of 22, 24, or even 32 percent. A parent who converts at a 22 percent rate today can spare a child from withdrawing at a higher rate during peak earning years, making the IRMAA surcharge a relatively small price compared to the legacy benefit.
Open conversations with family members about inherited IRA tax exposure are increasingly common among retirees in their late 60s and early 70s. Sharing the specific numbers, such as a projected $400,000 traditional IRA balance and what that means in forced distributions starting the year of inheritance, helps families make coordinated decisions rather than reactive ones.
Frequently Asked Questions
Does a Roth conversion count toward IRMAA in the same year I convert?
No. Because of the two-year lookback, a Roth conversion you complete in 2026 will not affect your Medicare premiums until 2028. SSA uses your 2026 tax return to set your 2028 Part B and Part D surcharges. This lag gives you a clear window to plan, but it also means the cost of a large conversion shows up later than most people expect.
What are the 2026 IRMAA thresholds for a married couple filing jointly?
In 2026 the first IRMAA surcharge for married joint filers begins when MAGI exceeds $212,000. The tiers rise through $266,000, $398,000, and $750,000, with a fifth tier above $1,066,000. Each tier adds a larger monthly surcharge to both Part B and Part D premiums for each spouse, so crossing a threshold affects both members of the couple simultaneously.
Can I reduce my IRMAA surcharge if my income drops after a big conversion year?
Yes, in some situations. If you experience a qualifying life event such as retirement, loss of a spouse, or divorce, you can file SSA Form SSA-44 and ask SSA to use a more recent year or an income estimate. A voluntary Roth conversion alone does not qualify as a life event, but a genuine and significant drop in ongoing income is often grounds for a successful appeal.
Is it ever worth paying the IRMAA surcharge to complete a Roth conversion?
Often yes. If your traditional IRA is large enough that future required minimum distributions will push you into higher tax brackets, or if your heirs will inherit the account and face high tax rates under the 10-year drawdown rule, the long-term tax savings of a Roth conversion can far outweigh a temporary IRMAA surcharge of $1,776 to $4,420 per year.
At what age should I start thinking about IRMAA when planning Roth conversions?
Start at age 60 at the latest. If you plan to enroll in Medicare at 65, the IRMAA lookback means SSA will first examine your age 63 tax return to set your initial premiums. Conversions done at 60, 61, and 62 carry no IRMAA risk because you will not yet be on Medicare when those returns are evaluated.
Does a qualified charitable distribution help avoid IRMAA on an IRA withdrawal?
Yes. A qualified charitable distribution, or QCD, allows individuals aged 70 and a half or older to transfer up to $105,000 directly from a traditional IRA to a qualifying charity in 2026. The amount transferred is excluded from MAGI entirely, which means it satisfies your required minimum distribution without raising your income and without triggering an IRMAA surcharge.
The IRMAA two-year lookback is one of those rules that feels unfair when it surprises you but feels completely manageable once you see it coming. With some advance planning, most retirees can convert meaningful sums to Roth accounts, protect their heirs, and still stay below the surcharge thresholds that would raise their Medicare bills. If you are considering a Roth conversion in 2026, sit down with a fee-only advisor who knows both the tax code and Medicare rules, run the numbers on your specific income, and make the decision with both eyes open.