IRA and 401(k) Withdrawals and Medicare Premiums: What Every Retiree Needs to Know

Every dollar you voluntarily withdraw from a traditional IRA or 401(k) counts fully toward the MAGI number that sets your Medicare Part B and Part D surcharges. This is true whether you're taking money out at 62, 68, or 72 — well before required minimum distributions ever begin. For retirees in the $109K–$205K income range, a single poorly-timed distribution can cost $1,148–$4,620 extra per person per year in Medicare premiums, two years later.

What counts toward IRMAA MAGI — and what doesn't

IRMAA MAGI = your Adjusted Gross Income (Form 1040, Line 11) + tax-exempt interest (Line 2a). Traditional IRA and 401(k) distributions are ordinary income and enter AGI in full. Key comparison:

The 2026 IRMAA brackets: where the cliffs are

IRMAA surcharges are cliff-based — one dollar over the threshold and you owe the full surcharge for the entire year. Your 2026 Medicare premiums are based on your 2024 MAGI.²

Base Part B premium is $202.90/month. Surcharges are per person; married couples each pay independently based on joint MAGI.

The two-year look-back: today's withdrawal hits your premiums in two years

SSA sets your Medicare premiums using the most recently available tax return — which is two years old by the time your premiums are set. This creates a planning window that works in both directions:

If you had a high-income year in 2024 and are now paying elevated 2026 premiums — and your income has since dropped — you may be able to appeal. But an SSA-44 appeal only works if your income dropped due to a specific qualifying life-changing event (retirement, loss of income-producing property, etc.). Voluntary IRA distributions are not qualifying events for the SSA-44 appeal — you would need to demonstrate a separate event that reduced income.

The IRA basis exception: non-deductible contributions come back tax-free

Not all traditional IRA money is equally taxable. If you made non-deductible contributions in any year (tracked on IRS Form 8606), that basis comes back to you tax-free on a pro-rata basis. Only the earnings and deductible-contribution portions count toward IRMAA MAGI.¹

Example: You have a $400,000 traditional IRA with $40,000 of non-deductible contributions (basis). Your basis ratio is 10%. If you withdraw $50,000, only $45,000 is taxable MAGI — $5,000 is a return of basis. The exclusion isn't large for most people, but it matters near a bracket cliff.

Importantly, this pro-rata rule applies across all your traditional IRAs in aggregate, not just the one you withdraw from. If you have multiple traditional IRA accounts, the IRS looks at total balance vs. total basis across all of them when calculating the exclusion.

The stacking problem: IRA distributions on top of other income

IRMAA doesn't care where your income comes from — it stacks everything. For many retirees, an IRA distribution isn't the only item on their MAGI. Consider how quickly income accumulates:

• Social Security: $28,000 gross → ~$23,800 taxable (85% at higher income levels)
• Pension: $36,000/year
• Dividends and interest from taxable accounts: $18,000
• Subtotal before any IRA withdrawal: $77,800

With that income base, a $35,000 IRA withdrawal pushes MAGI to $112,800 — $3,800 over the $109,000 Tier 1 floor. At this income stack, even modest distributions from retirement accounts can trigger IRMAA. A specialist models the full picture across all income sources, not just the IRA.

IRA withdrawal IRMAA impact calculator

Enter your other annual income and your planned IRA or 401(k) distribution to see which IRMAA tier you'd land in and what it costs per year.

Five strategies to manage IRA withdrawal IRMAA

1. Spread distributions across multiple years

The single most effective tactic for voluntary distributions is income smoothing. Instead of withdrawing $80,000 in one year, take $40,000 in each of two years. If each $40,000 keeps you below a cliff, you may avoid a surcharge entirely — or stay in a lower tier. The two-year look-back means the planning horizon is long: map out your intended withdrawals, your other income, and the bracket floors before you distribute.

2. Roth conversions during low-income years

Converting traditional IRA money to Roth in years when your other income is low is the most powerful long-term strategy. Roth distributions never count toward IRMAA MAGI — so every dollar you convert now is a dollar that won't trigger surcharges later, including during RMD years. The optimal conversion window is often ages 62–72 (after retiring but before Social Security and RMDs force income higher). Each year's conversion should be sized to stay just below the next IRMAA bracket cliff. See Roth Conversions and IRMAA for bracket tables and examples.

3. Track and use your IRA basis (Form 8606)

If you made non-deductible IRA contributions in any year, you have basis that comes back tax-free. Check your tax records for Form 8606 filings. Near a cliff, even a $5,000–$15,000 basis exclusion can make the difference between landing in one tier vs. the next. If you can't find old Form 8606s, a tax professional can reconstruct your basis from historical records.

4. Use Qualified Charitable Distributions instead of distributing and donating

If you're charitably inclined and age 70½ or older, a Qualified Charitable Distribution (QCD) — a direct transfer from your IRA to a qualified charity — never enters your AGI. The 2026 QCD limit is $111,000 per person.³ Instead of withdrawing $20,000 and then writing a check to charity (which makes the $20,000 fully taxable), the QCD routes the money directly to the charity and keeps your MAGI $20,000 lower. This is especially valuable when the QCD keeps you under a cliff that would otherwise trigger $1,148–$2,885/year in extra surcharges.

5. Time large one-time distributions around the two-year look-back

If you have a planned large distribution — funding a home purchase, paying off debt, helping adult children — consider when it hits relative to Medicare enrollment. Taking the large distribution in a year when you know your income will already be high (because you sold a business or have a high-income severance year) doesn't hurt much. Taking it in a year when you otherwise would have had clean, low MAGI triggers a two-year premium penalty. Distributions before you're on Medicare entirely (before age 65) also avoid direct IRMAA impact — though they will set your Medicare premiums for the first two years you're enrolled.

How voluntary IRA distributions differ from RMDs

Both voluntary distributions and required minimum distributions count the same way toward IRMAA MAGI — dollar for dollar. The key difference is control:

• Voluntary distributions (ages 59½–72 or 75): Entirely discretionary. You choose the amount, the year, and the timing. Maximum planning flexibility.
• RMDs (age 73+ for 1951–1959 births; 75+ for 1960+ births): Mandatory minimums. You can take more but not less. The only MAGI-reducing option for the mandatory portion is a QCD. See RMDs and Medicare Premiums for the compounding RMD problem.

This distinction matters because people approaching the pre-RMD window (ages 62–72) have a planning opportunity that disappears once RMDs begin. Doing Roth conversions now — even if it triggers some IRMAA — may result in lower lifetime Medicare premiums than leaving the money to compound in a traditional account and taking larger, mandatory RMDs later.

Will an SSA-44 appeal help?

An SSA-44 life-changing event appeal can reduce or eliminate an IRMAA surcharge if your income dropped due to one of seven qualifying events: retirement, reduced work hours, death of a spouse, divorce or annulment, loss of income-producing property, loss of pension income due to employer bankruptcy, or employer settlement payment.

Voluntary IRA distributions are not a qualifying event. If you took a large IRA distribution two years ago and are now paying elevated premiums, and your current income is lower, the SSA-44 is only available if a separate qualifying event — most commonly retirement — also occurred and caused your non-IRA income to fall. The appeal is based on your current reduced income, not on eliminating the prior IRA distribution from the record.

MedicareAdvisorMatch is a referral service, not a licensed advisory firm. We may receive compensation from professionals in our network. Content is for informational purposes only and does not constitute financial, tax, legal, or investment advice.