RMDs and IRMAA: Why This Matters for Retirees

Required Minimum Distributions (RMDs) increase your taxable income, which can push your Modified Adjusted Gross Income (MAGI) into higher Medicare IRMAA brackets. That means you may pay more for Part B and Part D premiums—often two calendar years after the income that caused it. This guide shows how IRMAA works, how RMDs interact with it, and practical strategies to keep your lifetime premiums and taxes lower.

What Is IRMAA? (Medicare Income-Related Monthly Adjustment Amount)

IRMAA is a surcharge added to your standard Medicare Part B and Part D premiums when your MAGI exceeds certain thresholds. MAGI generally starts with Adjusted Gross Income and adds back some items like tax‑exempt interest. The Social Security Administration (SSA) looks back two years (the "look‑back rule"): your 2025 premiums are typically based on your 2023 MAGI.

• Primary inputs: AGI, tax‑exempt interest, foreign income exclusions
• Timing: Income in Year N affects premiums in Year N+2
• Appeals: If your income dropped due to a qualifying life event (e.g., retirement), you can file an appeal (Form SSA‑44)

Tip: Because the look‑back window is delayed, Roth conversions or large capital gains realized before RMDs start can create IRMAA two years later—plan ahead.

How RMDs Push MAGI Into Higher Brackets

RMDs from traditional IRAs and employer plans increase your taxable income dollar for dollar. Once RMDs start (age 73 for many people today), they become a recurring MAGI source that can:

• Trigger a new IRMAA tier for the first time
• Keep you in a higher tier year after year
• Stack with capital gains, interest, dividends, and Roth conversions

Roth IRAs do not have lifetime RMDs for the owner. Roth 401(k)/403(b) balances are also exempt from RMDs in retirement under newer rules, which simplifies planning.

Strategies to Manage IRMAA With RMDs

1) Pre‑RMD Roth Conversions

• Convert portions of pre‑tax accounts in the years before RMDs begin to reduce later RMD size
• Fill low tax brackets intentionally; watch the IRMAA thresholds when converting
• Coordinate with capital gains and Social Security claiming to keep MAGI predictable

Related reads:

• RMDs + Roth Conversions: /calculator/rmd-and-roth-conversions
• RMD Secure 2.0 changes: /calculator/rmd-secure-2-0-changes

2) Use Qualified Charitable Distributions (QCDs)

• After age 70.5, QCDs sent directly from your IRA to a qualified charity can satisfy all or part of your RMD
• QCDs are excluded from AGI, helping with IRMAA, Social Security taxation, and credit phaseouts
• Keep acknowledgment letters and ensure the custodian sends funds directly to the charity

Learn more: QCD Guide — /calculator/qcd-complete-guide

3) Spread Income and Avoid Bunching

• Avoid stacking RMDs, conversions, and large capital gains in the same year
• If delaying your first RMD to April 1 would create a double RMD year, run the math carefully
• Consider realizing gains in smaller chunks across multiple years

See: First RMD timing — /calculator/first-rmd-april-1-decision

4) Optimize Withholding and Estimates

• Use RMD withholding late in the year to catch up to “safe harbor” without quarterly vouchers
• Keep MAGI in mind when choosing withholding vs. estimated payments

Details: RMD withholding vs estimates — /calculator/rmd-withholding-and-estimated-tax

5) Asset Location and Interest Management

• Place income‑heavy assets (taxable bonds, REITs) in tax‑advantaged accounts when possible
• Hold more tax‑efficient assets in taxable accounts to reduce annual MAGI drag

Worked Example: Avoiding an Unnecessary IRMAA Tier

Alex and Jordan are both 72 and expect RMDs to start next year. Their combined portfolio distributions and dividends already place them near an IRMAA threshold. They:

1. Convert a modest amount to Roth during their final pre‑RMD year to shrink future RMDs
2. Plan QCDs to cover part of their first‑year RMD
3. Defer realizing large capital gains until a lower‑income year

Result: Their Year 1 RMD is smaller, AGI stays below the next IRMAA tier, and premiums two years later remain at the lower bracket.

Common Mistakes That Increase IRMAA

• Delaying the first RMD to April 1 without modeling the double‑RMD effect
• Large December capital‑gain distributions from mutual funds (consider ETFs)
• Forgetting that tax‑exempt interest still counts toward MAGI for IRMAA
• Donating from a checking account instead of using QCD from an IRA

Frequently Asked Questions (FAQs)

Does a QCD reduce MAGI for IRMAA?

Yes. QCDs are excluded from AGI, which feeds into MAGI, often helping you stay below an IRMAA tier.

Are Roth conversions bad for IRMAA?

They can be if they push you over a threshold in the conversion year (impact shows up two years later). But converting earlier can reduce future RMDs and recurring IRMAA exposure. Model multi‑year outcomes.

Can I appeal an IRMAA determination?

Yes. If your income dropped due to a qualifying event (retirement, marriage status changes, etc.), file SSA‑44 with documentation.

What to Do Next

• Forecast your RMD with: /calculator/rmd-table-calculator
• Plan conversions before RMDs begin: /calculator/rmd-and-roth-conversions
• Use QCDs after 70.5: /calculator/qcd-complete-guide
• Review first‑year timing: /calculator/first-rmd-april-1-decision

A little advance planning can avoid lifetime IRMAA costs and keep healthcare premiums predictable.