Medicare for Attorneys and Law Firm Partners: IRMAA, K-1 Income, and the Equity Wind-Down Trap

Attorneys — especially equity partners at large firms, contingency fee practitioners, and high-income solo lawyers — land among the hardest-hit Medicare enrollees for IRMAA surcharges. Partnership K-1 income passes through at full ordinary income rates and counts dollar-for-dollar toward IRMAA MAGI. Contingency fee income can spike by $500,000 or more in a single settlement year, triggering Tier 4 or Tier 5 IRMAA two years later when the attorney is fully retired. Law firm equity wind-downs often pay out over several years at income levels far above retirement-income thresholds. And most general financial advisors are not equipped to model the interaction between partnership accounting, Medicare look-back windows, and the cash balance plan strategies that can cut six-figure IRMAA exposure in half. Here is what attorneys need to know.

How attorney income flows into IRMAA MAGI

IRMAA MAGI equals your Adjusted Gross Income (Form 1040 Line 11) plus tax-exempt interest (Line 2a). For most attorneys, the dominant income sources are one or more of the following:¹

The two-year look-back: why equity wind-downs create Medicare premium surprises

SSA determines your Medicare premiums using the most recent available income data from the IRS, which is always a two-year lag. Your 2024 MAGI sets your 2026 Part B and D premiums. Your 2025 MAGI sets your 2027 premiums. For attorneys at large firms, this structure creates a common and costly trap: the years spent winding down an equity stake — with K-1 income still at or near peak levels — become the look-back years for the first two years of Medicare coverage.²

A partner who spent 30 years building a practice, reduced to of counsel in 2023–2024 with K-1 income of $700,000 and $500,000, and retired fully in January 2025, enters Medicare in 2026 with:

• 2026 premiums based on 2024 income: $500,000+ → Tier 5 → $689.90/month Part B
• Current retirement income: $120,000 of counsel + SS + investment income → would be Tier 2 or lower

This is not a tax error or a mistake. It is how the two-year look-back operates. The critical question is whether SSA-44 — the life-changing event appeal — can help. In this case: if the attorney retired in 2025 (the year before Medicare enrollment), retirement is a qualifying life-changing event and SSA can use estimated 2025 income instead of 2024. If the transition to of counsel happened in 2023 but retirement as of counsel is not until 2026, the SSA-44 analysis becomes more complex. See IRMAA appeal guide for the exact SSA-44 analysis.

Contingency fee attorneys: the unpredictable IRMAA spike

Personal injury, mass tort, product liability, and class action attorneys often have highly variable income — modest annual billings punctuated by large contingency fees when cases resolve. For IRMAA purposes, this creates a problem that is fundamentally different from salary earners: the spike cannot always be predicted or calibrated in advance.

Consider Patricia, a 63-year-old plaintiff's attorney who settled a major pharmaceutical case in 2023. Her contingency fee from that single matter was $1.8 million — collected in the same year, triggering $1.8 million in Schedule C income. Her typical annual income was $160,000. Under the two-year look-back:

• 2025 Medicare premiums based on 2023 income: $1.8M+ → Tier 5 → $6,936/yr extra per person
• 2026 Medicare premiums based on 2024 income: if 2024 was back to $160K → Tier 2 → $2,885/yr

The $1.8M case resolved in 2023, but the IRMAA bill for it arrived in 2025. Patricia retired in 2024. Filing SSA-44 with her 2024 income of $160,000 as the basis for 2025 premiums is worth doing immediately — that is exactly what the appeal process is designed for. The qualifying event is retirement. If she was still actively practicing in 2024 at $160,000 and didn't retire until 2025, the appeal for 2025 premiums is less straightforward. The lesson: contingency fee attorneys in their early 60s should model Medicare premiums under several timing scenarios, including what happens if a major case closes in 2023, 2024, or 2025 relative to their planned retirement date.

Cash balance plan + solo 401(k): the most powerful lever for self-employed attorneys

For solo practitioners and small firm partners who control their own retirement plan design, the combination of a defined benefit (cash balance) plan and a solo 401(k) can produce substantial MAGI reductions in the critical two to three years before Medicare enrollment — exactly the years that determine first-Medicare-year IRMAA brackets.

The mechanics work as follows:³

• Cash balance plan: An employer-funded defined benefit plan. Annual contributions are actuarially determined to fund a target retirement benefit. For attorneys in their early 60s, contributions of $200,000–$300,000+ per year are achievable within the IRS maximum benefit limit of $290,000 for 2026. Contributions are fully deductible to the employer (or to the self-employed attorney on Schedule C via Schedule 1) and excluded from MAGI.
• Solo 401(k): Employee deferral of $35,750 (ages 60–63 super catch-up) or $32,500 (ages 50–59, 64+) plus employer profit sharing contribution, up to the 415(c) annual additions limit of $83,250 for ages 60–63 ($80,000 for ages 50–59, 64+). Employee deferrals reduce W-2 or Schedule C income directly.
• SEHID (IRC §162(l)): Self-employed attorneys may deduct 100% of health insurance premiums — including Medicare Part B, Part D, and Medigap supplement premiums — as an above-the-line deduction, directly reducing AGI and MAGI. A solo practitioner paying $202.90/month in Part B premiums plus $150/month in Medigap Plan G premiums deducts approximately $4,237/year from MAGI.

Example: A 62-year-old solo attorney grosses $450,000 from her practice (after direct business expenses). In 2024 — two years before she plans to enroll in Medicare — she implements a cash balance plan and maximizes solo 401(k) contributions:

• SE tax deduction: approximately $28,000 (half of ~14.1% SE tax on net SE income)
• Cash balance plan contribution: $280,000
• Solo 401(k) employee super catch-up deferral: $35,750
• Solo 401(k) employer profit sharing: limited to fill 415(c) gap — but given the CB plan, the combined limits allow both plans to coexist; employer solo 401(k) profit sharing: ~$0–$12,000 depending on plan aggregation rules
• SEHID (Medicare, Medigap, dental, vision): $5,000

Net MAGI from practice: $450,000 − $28,000 − $280,000 − $35,750 − $5,000 ≈ $101,250. With $8,000 in investment income, total MAGI ≈ $109,250 — just inside Tier 1. Adjusting contributions slightly keeps her at Tier 0. Without any plan contributions, her MAGI would be $430,000+ and she would be in Tier 5 ($6,936/yr extra per person).

The same strategy applied in both 2024 and 2025 — the two look-back years before 2026 and 2027 Medicare premiums — can eliminate IRMAA surcharges for the first two Medicare years entirely. The window closes at Medicare enrollment: once enrolled in Medicare, HSA contributions are disallowed and plan design choices become constrained. Starting the cash balance plan at age 60–62 maximizes the benefit.

IRMAA calculator for attorneys

Estimate your 2026 Medicare premiums based on your attorney income sources. Enter 2024 income and your deductions to see which IRMAA tier you fall in for 2026. You can also model your current retirement income to assess SSA-44 eligibility.

5 strategies to reduce IRMAA for attorneys

1. Implement a cash balance plan in the 3–5 years before Medicare enrollment. This is the highest-leverage strategy for high-income self-employed attorneys and law firm partners. A new cash balance plan can be established and funded with $150,000–$300,000 in annual contributions for attorneys in their early 60s, directly reducing MAGI in the years that will become the Medicare look-back period. For equity partners, the plan is established at the firm level; for solo practitioners, it is a personal plan on Schedule C. Time the setup so the highest-contribution years coincide with ages 62–64 — precisely the years that determine first- and second-year Medicare premiums. See Medicare for physicians for a parallel cash balance strategy used in medical practices.

2. Coordinate equity wind-down timing with the two-year look-back calendar. If you have a choice in the timing of your equity transition — such as the year you step down to of counsel, the pace of your equity buyout, or the year you begin law firm LTIP distributions — map those decisions onto the Medicare two-year look-back calendar. Income earned in 2024 affects 2026 premiums. Income earned in 2025 affects 2027 premiums. A partner who reduces her equity share more aggressively in 2024 (the look-back year for first-Medicare-year premiums) rather than 2025 may land in a lower bracket in the year that matters most. Work with a tax advisor to model the two-year runway before your Medicare enrollment date.

3. File Form SSA-44 at retirement. Attorneys who retire from active practice — whether as an equity partner, of counsel, or solo practitioner — qualify for an SSA-44 life-changing event appeal based on retirement. This allows SSA to use your estimated current-year income rather than the two-year-old tax return. For an attorney who earned $600,000 in 2024 and retired with $100,000 in investment income in 2025, the SSA-44 appeal can reduce 2026 IRMAA from Tier 5 ($6,936/yr per person extra) to Tier 0 ($0), saving nearly $7,000 per year. The appeal requires documentation of the qualifying event (retirement) and an income estimate. See IRMAA appeal guide for exact form requirements and processing timeline.

4. Use the Section 199A QBI deduction carefully — it does not reduce IRMAA MAGI. Many attorneys operating as S-corps or partnerships receive the 20% qualified business income deduction on their federal tax return. This deduction reduces federal taxable income but has no effect on IRMAA MAGI. MAGI is calculated from AGI, which is computed before the QBI deduction (which appears on Form 1040 line 13, below AGI). An attorney with $400,000 in S-corp W-2 income who takes a $72,000 QBI deduction still has $400,000 (net of any pre-tax contributions) in IRMAA-relevant income. Do not confuse QBI deduction savings on the tax return with IRMAA bracket management. See Medicare for business owners for a full discussion of the QBI misconception.

5. Use qualified charitable distributions (QCDs) once you reach 70½. If you have rolled law firm retirement plan assets (or solo 401(k) or SEP-IRA assets) into a traditional IRA, you can make QCDs of up to $111,000/year per person directly to qualifying charities, bypassing MAGI entirely.⁴ QCDs are excluded from AGI, not merely deducted — a critical distinction for IRMAA. An attorney with $140,000 in investment and retirement income who donates $35,000 to a legal aid organization or bar foundation via QCD reduces MAGI to $105,000 and drops from IRMAA Tier 1 to Tier 0, saving $1,148/year. Non-governmental 457(b) plans cannot be rolled to IRA and are not eligible for QCDs; firm-sponsored 401(k) and profit sharing plans must be rolled to IRA first. See 7 IRMAA reduction strategies for the full QCD framework.

Law firm deferred compensation and IRMAA timing

Many large law firms maintain non-qualified deferred compensation plans — sometimes called Long-Term Incentive Plans (LTIPs), deferred bonus plans, or partnership capital arrangements — that pay out at retirement. Under Section 409A, distributions from these plans must follow a schedule elected in advance: typically a lump sum at separation or installments over 5–15 years.⁵

If you have existing NQDC elections and are within 12 months of the distribution trigger date, you generally cannot change the timing. However, if you are more than 12 months away from a triggering event, you may be able to re-elect an installment schedule — provided the re-election accelerates no payment and defers each payment by at least 5 years under the §409A rules. Spreading a $2 million deferred compensation balance over 10 years at $200,000/year typically keeps each annual distribution in Tier 2 or Tier 3 rather than spiking to Tier 5 in a single year.

Work with a plan administrator and tax advisor to review existing 409A elections before they lock in — ideally 2–3 years before retirement when more options are available. See deferred compensation and IRMAA guide for the full §409A analysis.

What a Medicare specialist models that is hard to DIY

For attorneys, the planning complexity comes from the simultaneous interaction of multiple levers: K-1 income wind-down timing, cash balance plan contribution sizing, SSA-44 eligibility assessment, 409A election review, and the two-year look-back calendar mapped to Medicare enrollment date. Each decision affects the others.

The actionable window is typically age 62–64: before the look-back years for first-Medicare-year premiums are locked in. A fee-only advisor familiar with both Medicare IRMAA and law firm compensation structures can quantify the IRMAA impact of each scenario — partner K-1 reduction schedule, retirement date, LTIP distribution elections, and asset drawdown sequence — before any of those income events are finalized.

Sources

1. SSA POMS HI 01101.020 — IRMAA Sliding Scale Tables: 2026 IRMAA bracket thresholds and Part B/D monthly surcharge amounts verified from SSA POMS. Single-filer Tier 1 threshold $109,000; Tier 5 threshold $500,000. MFJ Tier 1 threshold $218,000; Tier 5 threshold $750,000. Standard Part B premium $202.90/month per CMS Nov 2025 fact sheet. MAGI for IRMAA = AGI (Form 1040 Line 11) plus tax-exempt interest (Line 2a). Verified June 2026.
2. CMS — 2026 Medicare Parts A & B Premiums and Deductibles: Standard Part B premium $202.90/month; IRMAA determination is based on MAGI from two years prior (2024 income determines 2026 premiums); 6-tier sliding scale applies. Verified June 2026.
3. IRS — 401(k) Contribution Limits 2026: elective deferral $24,500; age 50–59 and 64+ catch-up $8,000 (total $32,500); ages 60–63 SECURE 2.0 super catch-up $11,250 (total $35,750); Section 415(c) annual additions limit $83,250 for ages 60–63 and $80,000 for ages 50–59/64+ per IRS Rev. Proc. 2025-67. Defined benefit plan annual benefit limit $290,000 for 2026. Cash balance plan contributions are limited by the annual benefit accrual and are deductible employer contributions under IRC §404. Verified June 2026.
4. IRS — Qualified Charitable Distributions (QCDs): IRC §408(d)(8) permits QCDs from IRAs only (not directly from 401(k), 403(b), or nonqualified plans). 2026 annual QCD limit $111,000 per person per IRS Notice 2025-67. QCD amount excluded from AGI and therefore excluded from IRMAA MAGI — not merely deducted. Non-governmental 457(b) plans are ineligible for IRA rollover under IRC §457(b)(10) and thus do not qualify for QCDs. Verified June 2026.
5. IRS — IRC §409A Nonqualified Deferred Compensation Rules: Subsequent deferral elections must be made at least 12 months before the first scheduled payment and must defer all affected payments by at least 5 years to comply with IRC §409A(a)(4)(C). Distributions from NQDC plans are 100% ordinary income in the year received and count fully toward IRMAA MAGI. Lump-sum distributions are subject to the same MAGI rules as installment distributions; only the amount received in a given year is counted. Verified June 2026.

Values verified as of June 2026. IRMAA brackets per SSA POMS HI 01101.020. 401(k) and DB limits per IRS Rev. Proc. 2025-67. QCD limit per IRS Notice 2025-67. Consult a licensed advisor for guidance specific to your situation.