Roth Conversions and IRMAA: The Two-Year Look-Back Planning Guide

A Roth conversion can be one of the best moves in retirement planning — or one of the most expensive, if it triggers IRMAA surcharges two years later. Here's how to do it right.

The core conflict

Roth conversions are MAGI income. They add dollar-for-dollar to the income figure SSA uses to calculate your Medicare premium surcharge two years later. A $50,000 conversion this year doesn't just cost ordinary income tax — it potentially adds $1,148–$2,884 in IRMAA surcharges two years from now, depending on which bracket it pushes you into.

Most financial advisors model the tax cost of a Roth conversion correctly. Far fewer model the IRMAA cost. This guide shows you how to do both.

2026 IRMAA thresholds at a glance

These brackets determine the Part B + Part D surcharge you pay. IRMAA applies per enrollee — married couples with both spouses on Medicare each pay the full surcharge.

2026 premiums based on 2024 MAGI. Base Part B premium: $202.90/mo. Source: CMS 2026 Medicare Premiums Fact Sheet.¹

The cliff problem — and how to use it

IRMAA isn't a ramp — it's a cliff. One dollar over a threshold moves your entire MAGI into the next tier. For a single filer at $108,000 MAGI, a $2,000 Roth conversion costs ordinary income tax only. A $3,000 conversion pushes MAGI to $111,000 — triggering Tier 1 IRMAA and adding $1,148 in extra premiums two years later.

The strategy that follows: convert to-the-cliff, not past it. Know exactly where you stand relative to the nearest bracket boundary. Convert up to $1 under the next threshold and stop there, unless the long-term Roth benefit clearly justifies the IRMAA cost of crossing.

A worked example: $108K base MAGI, retiring at 64

Single filer, 2024 MAGI → 2026 premiums. Assumes no other MAGI changes. Each tier is a one-year IRMAA cost for the full premium year.

Key takeaway: converting $28,999 instead of $30,000 avoids a $1,736 jump in annual premiums for just $1,001 less converted. The IRMAA cost of crossing a cliff boundary is never proportional to how far you cross it.

Strategy 1: Front-load conversions before Medicare (ages 63–64)

The two-year lookback means conversions made before you're on Medicare carry no IRMAA cost. A 63-year-old who converts $150,000 in 2024 faces ordinary income tax on the conversion — but no IRMAA consequence, because they won't be on Medicare until 2026 at the earliest.

This window is one of the most underused planning opportunities in pre-retirement. If you know Medicare enrollment is 2+ years away, a large conversion now carries zero IRMAA risk. You're also likely in a favorable income year — no RMDs yet, possibly reduced or no earned income — which often puts the conversion in a lower marginal bracket than you'll face after Social Security and RMDs begin.

Strategy 2: Qualified Charitable Distributions to offset MAGI

QCDs (IRC § 408(d)(8)) allow IRA owners age 70½+ to transfer up to $111,000 directly to a qualified charity in 2026.² QCDs count toward your RMD but do not appear in your adjusted gross income — the distribution is excluded from MAGI entirely.

For retirees with charitable intent, this combination is frequently the most efficient structure: the QCD eliminates the charitable dollars from MAGI, creating headroom to convert additional IRA assets without crossing into a higher IRMAA bracket.

Strategy 3: Capital gain harvesting — sequence with conversions

Long-term capital gains count as MAGI for IRMAA purposes. Retirees with significant taxable brokerage accounts face a compounding problem: they want to harvest gains in the low-income gap years (before RMDs), but realized gains push MAGI toward IRMAA brackets two years later.

The solution is sequencing: model projected MAGI for each of the next 5 years — including projected conversions, capital gains realizations, RMDs, Social Security income, and any part-time income. Harvest and convert in years where MAGI is already in a bracket, adding to the existing tier rather than triggering a new one. Avoid adding income in years already near a cliff edge.

RMDs and the IRMAA compounding problem

Under SECURE 2.0 § 107, RMDs begin at age 73 for those born 1951–1959, and age 75 for those born in 1960 or later.³ RMDs are ordinary income — they add directly to MAGI. A retiree with a $2M traditional IRA at 75 faces RMDs of roughly $80,000–$100,000 per year (using IRS Uniform Lifetime Table divisors), which alone can push a single filer well into IRMAA Tier 1 or Tier 2 — before Social Security is added.

The compounding effect: large RMDs → higher MAGI → IRMAA surcharge two years later → higher Medicare premiums → less flexibility for further conversions. The most effective intervention is front-loading Roth conversions in the gap years (60–72) before RMDs start, while staying within IRMAA bracket boundaries each year.

When the conversion math still works despite IRMAA

Not every conversion is IRMAA-neutral — and that's fine. Some conversions are clearly worth the surcharge. The question is whether you've factored it in:

• Large future RMDs: a decade of front-loaded conversions — even with some IRMAA cost now — can reduce the future RMD burden that would push you into higher brackets in your 70s and 80s. Trading a smaller IRMAA hit now to avoid a larger one compounding for 10+ years is often the right math.
• Estate planning: heirs inherit Roth IRAs income-tax-free. If your traditional IRA is a meaningful part of your estate and heirs will be in high brackets, the conversion's IRMAA cost may be easily justified by tax savings at inheritance.
• State income tax: converting now in a no-income-tax state (Florida, Texas, Nevada, etc.) before a potential move beats a future conversion or inherited IRA distribution taxed at a high-rate state's rates.

What a specialist models that a generalist doesn't

A Medicare-specialist advisor builds a 10-year income projection that includes: projected Social Security timing, RMD trajectory by account, Roth conversion amounts, QCD capacity, capital gain harvesting opportunities, and IRMAA exposure year by year. The conversion plan isn't based on this year's brackets alone — it's a multi-year optimization that accounts for bracket drift as Social Security, RMDs, and IRMAA thresholds all shift together.

The two-year lookback is manageable. But managing it requires knowing where you'll be two years from now, not just where you are today.

Sources

1. CMS — 2026 Medicare Parts B Premiums and Deductibles (Fact Sheet). 2026 IRMAA thresholds, Part B base premium $202.90/mo, and Part B + Part D surcharge amounts per tier.
2. IRS — Qualified Charitable Distributions (IRC § 408(d)(8)). 2026 QCD annual limit: $111,000 per person, indexed for inflation.
3. IRS — RMD FAQs (SECURE 2.0 § 107). RMD age 73 for those born 1951–1959; age 75 for those born 1960 or later.
4. SSA.gov — Medicare Premiums: Rules for Higher-Income Beneficiaries. Two-year MAGI lookback mechanics and SSA-44 appeal process.

IRMAA thresholds and Medicare premiums verified against CMS 2026 publications. QCD limit verified per IRS 2026 cost-of-living adjustments. Values current as of April 2026.