Retirement plans can unravel from the inside, and not always because of market losses or tax hikes. One often-overlooked culprit? Medicare’s stealth surcharge, known as IRMAA (Income-Related Monthly Adjustment Amount). If you’re not discussing it with your clients, you may be missing a key risk that’s hiding in plain sight.
What Is IRMAA and Why Should Advisors Care?
IRMAA is a surcharge added to Medicare Part B and Part D premiums for individuals with higher incomes. For 2025, these surcharges apply to individuals with income over $106,000 and couples with income over $212,000, based on MAGI from two years prior. Once a client crosses into the next income tier, they are subject to the full surcharge of that tier.
Unlike tax brackets, IRMAA tiers are not marginal. This means even a small increase in income from sources like required minimum distributions, capital gains, or Roth conversions can trigger significant increases in Medicare premiums.
IRMAA Is a Growing Risk for Retirees
The cost of IRMAA has risen consistently year over year. Since 2019, Medicare Part B IRMAA surcharges have increased at a compounded annual rate of over 7 percent. With the government projecting Medicare spending to rise 7.6 percent annually through 2032, IRMAA surcharges are likely to follow the same upward trend.
This is not just a cost concern. It is a form of legislative risk. While IRMAA is not technically a tax, it reduces spendable retirement income in a very similar way. And since Congress and federal agencies can adjust IRMAA annually, clients have little control unless they plan ahead.
IRMAA and Roth Conversions: A Strategic Planning Opportunity
Advisors often recommend Roth conversions to reduce future tax liabilities. But Roth conversions can also serve as a proactive strategy to manage IRMAA.
Here’s why it matters:
Roth withdrawals do not count toward MAGI. This can help reduce or even eliminate future IRMAA surcharges.
Poorly timed conversions can spike IRMAA. Without a strategy, a large Roth conversion could push a client into a higher IRMAA tier for one or more years.
That is why any Roth conversion analysis should account for both tax bracket drift and IRMAA drift. By understanding how different conversion patterns impact both income taxes and Medicare surcharges, advisors can guide clients toward more efficient retirement outcomes.
Why IRMAA Should Be in Every Financial Advisor’s Playbook
Adding IRMAA to your client conversations helps demonstrate the full value of your retirement planning services. It connects the dots between tax planning, income optimization, and healthcare costs —three areas that retirees care deeply about.
Clients in their 50s and 60s may not yet be impacted by IRMAA, but that does not mean they should not plan for it. Rising premiums, legislative changes, and unexpected income events can all cause IRMAA surprises in retirement.
By taking a proactive approach, you can help clients:
Minimize long-term taxes and fees.
Protect their retirement income.
Gain more control over future Medicare costs.
Start the Conversation Today
Whether you are running retirement income projections or building a Roth conversion strategy, make IRMAA part of the plan. Educating clients about this often-overlooked fee can help them make smarter financial decisions and help you stand out as a comprehensive retirement advisor.
How Stonewood Advisors Stay Ahead of the Next Planning Conversation.
Watch a recent Stonewood Study Group focused on the legacy planning conversation. You’ll see how Stonewood helps advisors break down timely planning topics, client conversation angles, and practical strategies you can put to use immediately.
Expert insights. Real strategies.
Study Group Replay
Timely planning topics
Real client conversation angles
Practical strategies you can use
Real Advisors. Real Results.
See how advisors are using Stonewood software to win larger cases and deliver better
outcomes for their clients.
An advisor was working with a prospect who was a real "do-it-yourselfer" when it came to Roth conversions.
The client was converting assets up their existing tax bracket – and hadn't considered any impact to
IRMAA.
With Roth Done Right, the advisor was able to show an alternate pattern that sped up the conversion to
6 years. The new structure offered $30,000 savings in conversion taxes – a 20% reduction on the
prospect's conversion tax bill. The report also showed hundreds of thousands of dollars in long-term
tax and IRMAA savings from the converted assets – an amount the prospect hadn't been able to quantify
on his own.
Outcome
A new client with $1M in new AUM, and a $1M FIA sale to fund the conversion process.
An advisor was working with a prospect who already had assets with Ken Fisher. Fisher's team presented a
5% systematic withdrawal projection, so the advisor needed a stronger way to frame the income
conversation.
Using the Annuity Alpha report, the advisor showed how an annuity could deliver over 8% in annual cash
flow with lifetime income, plus a long-term care doubler. The contrast was clear enough that the prospect
moved forward.
Outcome
$1.5M placed and a $100K in new business revenue.
An advisor was working with a 58-year-old couple with an established, well-funded retirement income plan,
leaving an additional $3M IRA to build out a legacy for the kids. The couple's existing advisor had no
real additional plan for this money, other than to keep it in their managed account and grow that money as
much as possible for the kids.
Using the Legacy Done Right report, the advisor showed the need for tax planning on this $3M IRA.
According to the advisor, the simple analysis "opened up the wallet" to the Roth conversion story. The
advisor then used the blended Roth/Life feature in the report to show a blend of Roth Conversion assets
with some Life Insurance to help maximize the client’s legacy.
Outcome
$3M in motion. The advisor picked up a $1.5M FIA sale that will be converted to Roth. And the advisor
also sold a 5-Pay Protection focused IUL policy at $225,000 of premium per year.
An advisor group incorporated the Total Tax Burden report into the strategy presentation for all new
prospects. They ran the tax snapshot for every new client as part of their first meeting conversation,
quantifying the growing tax burden of IRA money – and illustrating the kinds of tax savings possible
when working with their firm.
Starting in January of 2023, this simple analysis was presented to every single prospect who walked in
the door. The goal was to differentiate their practice and drive overall revenue growth through various
Roth conversion strategies.
Outcome
From 2022 to 2025, new annual AUM rose from $5M to $50M. Annual FIA sales rose from $3M to $35M.
And annual life premium rose from $50K to $1M.
