I think the Roth conversion does count. When we were doing our conversion last year, our FA was aware of where we were in regards to IRMAA and then realized we were still young enough that it didn’t matter.
This is where the info came from but I don’t claim any expertise in this.
https://www.hhs.gov/about/agencies/omha/the-appeals-process/part-b-premium-appeals/index.html
Roth conversion does count. We had to calculate ours carefully because we don’t want to pay an IRMAA.
I will say, when a spouse dies, I don’t think the surviving spouse should get dinged with the IRMAA
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I agree with you in some ways, as inheritances are not taxable - getting spouse’s or another’s assets upon death… However, since the funds in were ‘pretax’ - that is the rub. Maybe that will get worked out in time. Younger people have the advantage of putting money right into Roth IRA or Roth 401k - we were happy with 401k as it was introduced and developed.
Paradigm changes over time.
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I guess I wasn’t clear. I don’t mind paying my income taxes where applicable.
But IRMAA is an additional cost to Medicare, not a tax bill. I think surviving spouses should get some kind of consideration when their spouse dies re: IRMAA for their Medicare premiums.
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That is a very good question. Since we see our financial advisor every 6 months, we need to make sure to ask significant questions that will potentially affect us when things occur like at our mandatory distribution age.
At some point, we will be getting advising from a CPA.
IRMAA can be appealed due to life changing events (ie not Roth Rollover reasons). I’ve heard of it being done when retirement makes income lower than the 2-year lookback.
https://www.ssa.gov/medicare/lower-irmaa
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I realize my earlier post was confusing. I was saying a Roth conversion would not count as grounds for an IRMAA appeal.
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Oooooh! Yeah, that was confusing. lol
That life-changing event only counts if it’s listed on the SSA-44 form.
Winning the lottery – one time event – does not count. Selling a large asset for cap gain does not count. Voluntary Roth conversions don’t count.
Divorce, losing your job and/or retiring does count.
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Oh good, something more to worry about. We’ll have a highish income in 2025 thanks to the rest of our initial RMD from 2024, and the 2025 RMD. I gather we have to be careful to keep our AGI under $212,000 in 2025 to avoid increased premiums in 2027? This is a year by year determination, correct? 2026 ongoing should stay under the bracket.
We delayed some of our first RMD to hopefully avoid edging very far into the next tax bracket.
So will this one time deal that let us shift our first RMD into early the next year give us a valid reason to appeal increased premiums if we do go over $212,000? Not an immediate concern but one to watch, I guess.
Not a valid reason to appeal IRMAA surcharges, as blue bayou outlined above.
Also note that IRMAA looks at MAGI and not AGI.
It’s probably worth modeling your tax return to calculate the trade-off between a higher marginal federal rate (+ state, if applicable) versus the IRMAA surcharge. Once you’ve tripped the IRMAA surcharge bracket, it may make sense to convert up to the top of that bracket, but you also need to look at federal and state tax impacts.
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I want to say that even worrying about IRMAA, which I would not have done, is one reason that I am happy to pay a FA.
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Thanks, I figured we don’t have a LCE but hope springs eternal. Our MAGI and AGI are the same, I think.
We’re definitely going well into the 22% bracket in 2025; hoping we stayed under it in 2024 but those darn capital gain distributions in late December (I have a few inherited mutual funds that tend toward that unanticipated income, but selling out would be a humongous capital gain). We should not have an issue staying in the 22% bracket in 2025. Hitting 24% almost certainly would mean hitting the IRMAA level. So perhaps there will be a late year RMD charitable contribution needed to reduce that income. We’ll see.
I just mentioned this to husband and he asked if gifts reduced our income. What? He meant like giving son money. Um, no. Sigh.
At least thanks to this thread we have withheld enough tax from our 2024 RMD to cover our Safe Harbor. I have started using the terms Tax Burden and Safe Harbor with husband to avoid confusion with tax paid and tax owed.
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I am a big fan of tax efficiency, but it’s hard for me to understand all the gyrations around avoiding IRMAA, but maybe I am misunderstanding it. Looks like to me in the highest income bracket (which is $500k for single or $750k for married filing joint) part B is $629 and $86 above your plan premium for part D for a total of $715 for $8,580 per year. Everyone pays $185 for B anyway (is that right?), so the differential is $530 per month or $6,400 per year per person. It isn’t nothing, but it’s still a whole lot less than paying the $15 - $18k per year on the exchange per person. With high deductibles to boot. And that’s the highest amount one would pay. There are obviously iterations between the base income level and when the max amount kicks in.
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Not a major issue, but avoiding IRMAA in 2025 would save us $2100 in 2027. So why not. Also, if it can be done by RMD charitable contributions, we also save taxes on the donated amount in 2025. That would be the marginal rates of 22% Federal and 9.3% CA. Plus we would be doing good for a charity.
So worth at least paying some extra attention. Although who knows what legal changes could be coming to make all planning moot.
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you understand correctly. To me, the most irksome thing about IRMAA is the cliff: just $1 over the threshold means higher taxes for 12 months. OTOH, if I was lucky enough to have the kinda income for IRMAA when I’m in my 70’s, I’d happily pay.
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Yep, for me it’s the cliff-like nature of it. Last year we miscalculated and were over by less than $100. Boom, we will get the full up charge. Could have pulled more money out up to the tax bracket limit if we had known.
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Here is a video clip - it covers a lot of things people are thinking about with retirement. This is somewhat of an ‘infomercial’ from the financial group site with this N AL group Cloud Financial (so find an advisor if you wish in your area, not with the phone number provided). We now work with another from the group, but Don was our advisor for quite a few years. Don has a great way of explaining things but also wants to answer questions and do a good job for his clients.
The firm has grown, and with the growth has opportunities for our money invested with group funds.
The people on this CC thread investigate and learn. Don gives some examples and also discusses things that a fiduciary financial advisor does.
For someone who knows a lot and is secure in what they are doing in planning retirement, they probably find everything Don talks about as ‘covered’. One thing a financial advisor should be able to do is provide the financial projections based on different assumptions, to give reassurance on one’s retirement nest egg.
We are in that window 5 years before and 5 years after retirement and find ourselves content with where we are. Planning for the transition with RMD when that time comes and also changes with our family and our circumstances. We SWAN.
Gen Xers talk about retirement savings
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