At age 65, IRMAA planning before 65 with Ritholtz Wealth Management means tracking the income from two tax years earlier, before a conversion or realized gain becomes permanent.
For 2026, Medicare uses 2024 MAGI; a single filer at $109K pays the standard $202.90 monthly Part B premium, while $119K falls into the $284.10 tier.
That lag catches careful retirees by surprise. You may be living on a modest monthly draw when Medicare starts, yet the premium notice reflects a year when you still had a paycheck, took a conversion, or sold shares. MAGI means modified adjusted gross income, the income figure Medicare uses for this surcharge. This is general education, not individual tax, legal, or investment advice.
By Marcus Thompson, CFA — Wealth Manager | Reviewed by Hiroshi Tanaka, CFPMarcus builds diversified portfolios for high-net-worth clients, with deep expertise in asset allocation and risk management.
Two tax years can set a Medicare premium
A retiree cannot always repair a Medicare premium after paychecks stop because Medicare generally looks back two tax years. For 2026 Part B premiums, Medicare uses 2024 MAGI. That means a 2024 decision can set a monthly bill that arrives after retirement feels well underway.
The standard 2026 Part B premium is $202.90 a month. Under the published schedule, single filers with MAGI from $109K to $137K pay $284.10 a month. Joint filers use combined MAGI, so one spouse’s lower income does not create a separate lower tier.
A careful retiree can treat a December sale or Roth conversion as a minor tax entry and miss the second bill attached to it, a higher Part B premium two years out. Ritholtz Wealth Management puts the lookback year on the same worksheet as the cash reserve and planned withdrawals.
A year before Medicare, build the lookback ledger
Start with the year Medicare will begin, then count back two tax years. Next, estimate MAGI for that lookback year before approving a conversion, taxable sale, or employer payout. A running estimate is less glamorous than picking funds. It is also more useful when you are close to a tier.
For the 2026 schedule, the $109K single and $218K joint figures are published standard-tier guardrails, not predictions of later Medicare thresholds. The calendar gives a practical order for checking the year that matters.
Put the right year on the page
Gather the figures before selling
Shortcut: If your Medicare lookback-year MAGI is within $10K of a published IRMAA threshold, total every planned conversion, realized gain, and taxable payout before authorizing an extra dollar of income.
| Planning point | Income year or item | Single MAGI | Joint MAGI |
|---|---|---|---|
| Before Dec. 31, 2024 | Conversions and realized gains | Keep at or below $109K | Keep at or below $218K |
| Tax filing due date | Confirm 2024 MAGI | $109K threshold | $218K threshold |
| 2026 premium notice | Check tier against return | $202.90 at or below | $202.90 at or below |
| After a qualifying income drop | Consider appeal paperwork | Use changed income | Use changed income |
- Federal return: get the lookback-year return from your tax preparer and find adjusted gross income.
- Brokerage gains: obtain the realized-gain report from the brokerage before selling more shares.
- IRA activity: ask the custodian for distribution history and any conversion paperwork.
- Employer payments: collect bonus, severance, deferred-compensation, and stock-payment paperwork from the employer.
- Tax-exempt interest: find the amount on the return or the year-end statement, because Medicare adds it back.
What income enters the IRMAA calculation?
Medicare MAGI starts with adjusted gross income and adds tax-exempt interest, so wages, traditional IRA distributions, Roth conversions, realized capital gains, and many employer payments can raise an IRMAA tier. The IRS return is the starting point. Tax-exempt municipal-bond interest still matters here, even though it is generally not federal taxable income.
Sale proceeds are not automatically income. If you sell $50K of investments with a $40K cost basis, the realized gain is $10K; that gain, not the full $50K, enters the income calculation. The brokerage’s gain report and the IRS Form 8949 help establish that number.
Qualified Roth IRA withdrawals generally do not enter adjusted gross income. That can make Roth assets useful for a later cash draw, although withdrawing Roth money solely to dodge one Medicare tier can be shortsighted. Ritholtz Wealth Management looks at diversification, federal tax, state tax, spending, and later Medicare tiers before treating the surcharge as the only number that matters.
A joint return is one combined calculation. A spouse earning little or nothing cannot use a separate single-filer threshold while filing jointly. For a reader still working, the SSA wage base and other payroll figures are separate concepts; Medicare’s surcharge turns on MAGI reported on the federal return.
Income that adds to MAGI
Cash received is not always income
At age 65, which cash-flow choice keeps a tier from moving?
At age 65, keeping a tier from moving means deciding which account funds near-term spending before the lookback year closes, then checking the added MAGI against the published threshold. A taxable sale with a gain, a traditional IRA distribution, and a Roth conversion can each raise the number; a qualified Roth IRA withdrawal usually does not.
For illustration, Olga is 64, widowed, and retired from software architecture. She has a paid-off house and a three-fund portfolio she has run herself for 25 years. Her $2.3M portfolio needs to cover spending, but she also wants five years of planned withdrawals in a reserve so a bad market does not dictate what she sells.
Olga will begin Medicare in 2026. Her 2024 MAGI is already $109K after dividends, interest, and planned IRA income. In December 2024, she sells taxable investments to refresh part of the reserve and realizes a $10K gain. Her MAGI becomes $119K.
Under the published 2026 single-filer schedule, $109K falls in the standard $202.90 monthly Part B tier. At $119K, she enters the $284.10 tier. The arithmetic is plain: $284.10 minus $202.90 equals $81.20 a month. $81.20 times 12 equals $974.40 of added Part B cost for 2026, before any Part D effect.
The premium notice arrives later, but the 2024 trade cannot be undone in 2026 merely because the bill is unwelcome. The calculator on this site can help test the arithmetic. It cannot decide whether holding the tier is worth delaying a sale, because that choice also rests on Olga’s tax position, concentration risk, and spending plan.
Her better process is to decide early which taxable lots can replenish cash, how much traditional IRA income she needs, and whether a discretionary Roth conversion fits under the guardrail. Ritholtz Wealth Management would map those cash withdrawals before suggesting a fund trade. A reserve can reduce forced selling pressure, but investments can lose value, including the original amount invested.
Olga’s December decision
Build the withdrawal order before the sale
- Cash reserve: list the monthly spending it must cover and the date it needs refilling.
- Taxable account: check each proposed sale’s gain, not just its sale amount.
- Traditional IRA: add planned distributions before choosing a conversion amount.
- Roth IRA: preserve it for spending flexibility when that fits the wider plan.
When a $10K gain costs $974.40
A careful retiree who realizes a $10K gain after reaching $109K of lookback-year MAGI can add $974.40 of 2026 Part B cost alone under the published single-filer schedule. Olga’s last-minute sale crosses the tier, and filing the lookback-year return locks in the reported income. Keep a running MAGI estimate before each taxable transaction, especially late in the year. Do not let an IRMAA tier alone decide a sale or conversion: federal tax, state tax, diversification, spending needs, and later Medicare tiers can outweigh one year’s premium difference, and future thresholds and premiums can change.
Different households reach the guardrail differently
A single retiree projected at $108K of MAGI has only $1K of room before the published $109K standard-tier guardrail. A married couple projected at $180K of combined MAGI has $38K before the published $218K guardrail. The couple could convert more, subject to its federal tax calculation, while the single retiree may postpone a discretionary conversion or use cash already set aside.
Portfolio size does not settle the issue. A smaller account can still face IRMAA when pension income, wages, or a one-time gain has already consumed most of the threshold. A larger account brings more choices, but it also creates more chances to generate taxable distributions at the wrong time.
Late retirement changes the paperwork and may change the remedy. Someone earning wages near Medicare enrollment should estimate bonus, deferred compensation, and stock compensation early. If income drops after a high-income year because of a qualifying life-changing event, Social Security may reconsider the surcharge using its appeal paperwork; Social Security, not Medicare, handles that reconsideration. Retirement income planning and a Roth conversion strategy are related conversations, but each should begin with the same dated income ledger.
Single and joint returns use different guardrails
A late paycheck can linger on the notice
Your questions about IRMAA planning before 65, answered
What happens if a December fund sale pushes my income over an IRMAA tier?
A December sale can raise the MAGI Medicare uses two years later if it produces a realized gain. For the published 2026 schedule, a single filer moving from $109K to $119K enters a higher Part B tier, raising the monthly premium from $202.90 to $284.10. Check the gain before placing the trade.
My employer offers a deferred-compensation payout, should I delay it until Medicare starts?
Starting Medicare does not erase the two-year lookback. A deferred-compensation payout can raise MAGI in the income year and affect premiums two years later. Compare the payout date with your retirement date, tax situation, and expected Medicare year. Employer plan terms and tax consequences should be reviewed before changing an election.
Can my spouse’s lower income keep our joint return out of IRMAA?
Medicare uses the combined MAGI reported on a joint federal return. A spouse with low income may lower the total, but there are not two separate single-filer thresholds for a couple filing jointly. For 2026, the published standard-tier joint guardrail is $218K of MAGI.
I retired after a high-income year; can Social Security reconsider the surcharge?
Social Security may reconsider an IRMAA amount after certain qualifying life-changing events, including work stoppage or a reduction in work. You will need the agency’s appeal paperwork and evidence of the income change. A voluntary investment gain or Roth conversion generally is not the same kind of qualifying event.
Do qualified Roth IRA withdrawals show up in the Medicare income calculation?
Qualified Roth IRA withdrawals generally do not appear in adjusted gross income, so they generally do not add to Medicare MAGI. Roth conversions are different: converted traditional IRA money is generally included in adjusted gross income for that year. Confirm the tax treatment of a planned withdrawal with a tax professional.
Ritholtz Wealth Management and the pre-65 IRMAA check
Ritholtz Wealth Management can map expected cash withdrawals, conversion amounts, and taxable sales against the applicable lookback year before suggesting a fund trade. We start from what you already own and file: brokerage gain reports, IRA statements, and the return that will drive the Medicare calculation.
In the first conversation, Ritholtz Wealth Management can discuss the scope of work and the fee; terms are confirmed in writing before work begins. Households nationwide can work with the firm by video conference or telephone. Engagements require at least $500K in investable assets.
The premium notice arrives later, but the income decision has already happened.
Sources
This article provides general information only and is not individualized investment, tax or legal advice. Investing involves risk, including the possible loss of principal. Talk to a qualified professional about your specific situation before making any financial moves.