What Is IRMAA? IRMAA in Tax Planning for Retirees, an Advisor Primer

For independent retirement advisors, tax planning conversations often begin with the usual suspects: Roth conversions, RMDs, Social Security taxation, capital gains, estate planning, and the long-term direction of federal tax rates.

But there is another retirement cost that deserves more attention.

IRMAA.

Yes, it sounds like the name of a great aunt who shows up at Thanksgiving and asks uncomfortable questions. But for higher-income retirees, IRMAA can create a very real drag on spendable retirement income.

And for advisors focused on tax-smart retirement income planning, it can become a powerful way to help clients see the value of proactive planning.

What Is IRMAA? The Basics Every Advisor Should Know

IRMAA stands for Income-Related Monthly Adjustment Amount. It is a surcharge added to Medicare Part B and Part D premiums for certain higher-income Medicare beneficiaries.

In plain English: Higher-income retirees may pay more for Medicare. Here are the basics you should know:

How is IRMAA Calculated?
The surcharge is based on Modified Adjusted Gross Income, or MAGI, from two years prior. This means a client’s current Medicare costs are based not on this year’s income, but on income reported two tax years ago.

IRMAA also works differently than income tax brackets in that the surcharge is not progressive. Once a client crosses into an IRMAA bracket, they are subject to the entire surcharge for that bracket.

IRMAA makes fine-tuning your client’s income plan especially important.

How Does My Client Know if They Are Subject to the IRMAA Surcharge? 

The Social Security Administration will notify your client of IRMAA surcharges for the coming year. Many savers have IRMAA deducted directly from their Social Security benefit, though savers may also pay the fee directly to the Social Security Administration.

How Are IRMAA Rates Set? 

Each year, the Centers for Medicare & Medicaid Services (CMS) adjusts the IRMAA brackets based on the percentage movement of the Consumer Price Index. They may also adjust the surcharges themselves, which is the additional amount a saver will pay at each bracket level, based on the experience and needs of the Medicare program. The Social Security Administration (SSA) then announces the updated IRMAA brackets and surcharge rates for the upcoming year in the fall.

The 2026 IRMAA Brackets, in Plain Numbers

Here’s where IRMAA stands this year. 

For 2026, the standard Medicare Part B premium is $202.90 a month. Surcharges begin once a saver’s MAGI crosses roughly $109,000 for single filers or $218,000 for joint filers, based on 2024 income.

 At the first surcharge tier, total Part B premium can move to about $284.10 a month. At the top tier, above roughly $500,000 (single) or $750,000 (joint), the premium can reach $689.90 a month per person. Part D surcharges at these thresholds range from about $14.50 to $91.00 a month, on top of a saver’s regular Part D plan premium (CMS, 2026 Medicare Parts A & B Premiums and Deductibles).

Figures reflect 2026 premiums based on 2024 MAGI, per CMS, November 2025. CMS estimates roughly 8% of Medicare beneficiaries pay some level of IRMAA surcharge today – and many of these beneficiaries are the clients who come to your office looking for guidance. 

It’s worth noting that IRMAA can be appealed if your client has a significant income change from the look-back period. Some clients see a meaningful income drop after retirement, divorce, or the loss of a spouse, well below the figure Medicare used to set their premium under the two-year lookback. In those situations, the Social Security Administration allows a request to use more current income instead, through Form SSA-44. 

Why IRMAA Matters in Tax Planning for Retirees

For the retirees you serve, the goal is not simply to maximize income. It is to maximize spendable income.

A client may have a strong retirement income plan on paper, but if taxes, Medicare surcharges, and other government fees eat away at their income, the amount they actually get to spend in retirement can be at risk.

This is where IRMAA fits into the retirement planning conversation.

While IRMAA is not technically a tax, it behaves like one as clients generate income in retirement. After all, it’s money paid to the government. It reduces spendable income. And it is tied directly to income levels.

What’s more, the government can easily raise IRMAA rates, since they do not require a Congressional vote to change. Each year, the government can adjust both the brackets for inflation (based on the CPI) and the fee itself based on experience and the funding needs of Medicare. 

This is a prime reason IRMAA rates have increased almost every year since the surcharge’s inception. For example, look at Medicare Part B surcharges for the lowest tier. Since 2019, IRMAA surcharges have risen at a compounded rate of 7.1% a year. This year, the IRMAA surcharge increased 9%. 

For advisors, this growth in IRMAA makes it an increasingly important part of the retirement income discussion. Many of our clients will be subject to IRMAA when they retire; even more could be subject to IRMAA later in retirement, when one spouse dies and the other spouse is subject to the lower single-rate tiers. 

Regardless of if and when your clients are impacted, IRMAA is an important cost to evaluate to ensure your clients enter retirement with a predictable income plan. 

IRMAA and Your Client’s Legislative Risk

Today, many advisors are focused on helping their clients address Tax Risk in retirement. Tax risk is the risk that a person’s taxes will be higher in retirement than planned, leaving them with less income to spend because more is going to the IRS. Tax risk is an important area to address in retirement planning. 

But to protect clients from more complete risks in retirement, we need to look beyond Tax Risk to address Legislative Risk as well. 

Legislative Risk is the risk that Washington changes the rules, and those rule changes negatively impact a saver’s retirement approach. Legislative Risk can include changes that impact retirement vehicles, like 401(k)s and IRAs; changes that impact the structure of taxation (what is taxed, when it is taxed, who it is taxed for); and changes that impact other government methods of generating revenue, like fees and surcharges. 

While IRMAA surcharges are not technically a tax, they are absolutely a fee that can reduce the spendable income a saver can access (since more money must be paid to the government in the form of surcharges). 

IRMAA fees are particularly susceptible to legislative risk since they can change every year. A client can not predict what they will pay in IRMAA one, five, or even 10 years in the future. As mentioned above, every year, the government can adjust both the brackets for inflation (based on the CPI) and the fee itself based on experience and the funding needs of Medicare. 

Why IRMAA Matters in Roth Conversions 

As financial professionals, it’s important to understand IRMAA and the role it plays in retirement income planning. 

This discussion becomes particularly important as savers consider Roth conversions. The reason is twofold: 

1. First, over time, a Roth conversion can help a saver lower their MAGI and, therefore, their IRMAA surcharges. For the purposes of IRMAA, the SSA calculates a saver’s MAGI based on taxable income from 401(k)s, IRAs, working income, and the taxable portion of their Social Security benefit. However, income from Roth accounts do not count toward MAGI for the IRMAA calculation. By accessing retirement funds from a Roth account in the future, your client can potentially lower or eliminate their IRMAA surcharges. 
2. Second, IRMAA is an important consideration as you structure a client’s Roth conversion. As we know, clients often like to spread out a Roth conversion over a number of years to avoid an inflated tax bill in a given year. A true Roth conversion analysis must take into account three distinct impacts: 

• The total taxes and fees expected to be paid if a saver keeps the IRA versus converting the IRA to a Roth. This is the analysis that helps the client decide if a Roth conversion makes sense in their situation.
• Once a client has made the decision to convert, we must analyze two areas to determine the optimal conversion pattern for that client: 
  • First, Tax Drift. If the additional income from a conversion pushes a saver into a higher tax bracket for a given year, the portion of the converted funds in that higher bracket will have a higher tax responsibility.  
  • Second, IRMAA Drift. If the additional income from the conversion pushes the saver into a higher IRMAA bracket, they could pay more in fees during the conversion.
• By analyzing the potential Tax & IRMAA drift for a client – and weighing it against a client’s concerns about where taxes are heading and when – we can help optimize the Roth conversion pattern, minimizing not only lifetime taxes in retirement but also the total taxes and fees our clients pay while converting. 

Stonewood built our Roth Done Right software to do this work for you. In one simple report, Roth Done Right analyzes the tax and IRMAA impacts of a conversion – and how to optimize them for your client. Request a sample report here → https://www.stonewoodfinancial.com/software/roth-done-right/ 

Planning Conversations Advisors Should Be Having Around IRMAA

IRMAA is a topic well-suited for client seminars, webinars, email campaigns, and social media outreach. Because many savers are not aware of the IRMAA surcharges until notified by the government, it is a great topic for client education and lead generation. 

For savers impacted by IRMAA surcharges, your expertise will help them better plan and allocate their retirement assets. And even savers who are not currently subject to IRMAA surcharges will be better prepared for the legislative changes that could lie ahead. 

After all, independent retirement advisors are competing in a crowded marketplace.

Many prospects have heard generic messages about retirement income, taxes and legacy. Fewer have heard a clear explanation of how taxes, Medicare surcharges, and legislative risk can interact in retirement – and what they can do today to address it.

That creates an opportunity.

IRMAA is a technical topic, but the client-facing message aligns with the rest of your tax planning:

“The decisions you make today can affect how much of your retirement income you actually get to keep in the future.”

Stonewood has made the conversation easy with our Roth Done Right software, which optimizes your client’s Roth conversion for both tax and IRMAA savings. See how you can generate the most effective Roth conversion analysis for your client – in under 60 seconds, no tax return needed → https://www.stonewoodfinancial.com/software/roth-done-right/ 

The Bottom Line on IRMAA in Tax Planning for Retirees

IRMAA may not be the first topic that comes to mind when advisors think about retirement tax planning.

But it deserves to be part of the conversation.

For higher-income retirees, IRMAA can reduce spendable income. For clients considering Roth conversions, IRMAA can affect the timing and structure of the conversion strategy. And for advisors focused on tax-smart retirement planning, IRMAA provides a clear example of why retirement income planning needs to account for more than market returns alone.

Keep in mind, here at Stonewood we’re not CPAs. We build analysis tools to help advisors evaluate the potential tax and IRMAA impact of strategies like Roth conversions for their clients. Be sure to work with a qualified tax professional on any specific client situation.

Frequently Asked Questions

What is IRMAA?

IRMAA, or the Income-Related Monthly Adjustment Amount, is a surcharge added to Medicare Part B and Part D premiums for beneficiaries whose MAGI exceeds set thresholds. For 2026, it applies once MAGI crosses roughly $109,000 for single filers or $218,000 for joint filers, based on income from two years earlier.

Why does IRMAA matter in tax planning for retirees?

IRMAA behaves like a tax even though it is technically a Medicare premium surcharge. It reduces spendable retirement income and is directly tied to a client’s MAGI, which makes it a meaningful part of any tax-smart retirement income conversation, alongside brackets, RMDs, and Social Security taxation.

How does a Roth conversion affect IRMAA?

A Roth conversion can raise MAGI in the year of conversion, which, due to the two-year lookback, may increase Medicare premiums two years later. Over the longer term, Roth distributions generally do not count toward MAGI, so a completed conversion strategy can reduce IRMAA exposure later in retirement.

What is the two-year IRMAA lookback?

Medicare bases a given year’s IRMAA surcharge on MAGI reported two tax years earlier. For 2026 premiums, that means the Social Security Administration looks at 2024 MAGI, so income decisions made today can affect Medicare premiums two years from now.

Can a client appeal an IRMAA surcharge?

Yes, in specific situations. Clients who experience a qualifying life-changing event, such as retirement, divorce, or the death of a spouse, can file Form SSA-44 with the Social Security Administration to request a redetermination using more current income. A Roth conversion generally does not qualify as a life-changing event for this purpose.

Is IRMAA the same as a tax bracket?

No. IRMAA is a cliff-style surcharge, not a progressive tax bracket. Once MAGI crosses a threshold, the full surcharge for that tier applies, rather than a gradually increasing rate the way federal income tax brackets work.

What software helps advisors model IRMAA alongside a Roth conversion?

Roth Done Right models a multi-year Roth conversion scenario and accounts for both the short-term and long-term IRMAA cost of converting, so advisors can show a client the combined tax and Medicare premium impact in one client-facing report rather than treating IRMAA as an afterthought. Learn more at stonewoodfinancial.com/software/roth-done-right.

Sources and References

1. 2026 Medicare Parts A & B Premiums and Deductibles. Centers for Medicare & Medicaid Services, November 14, 2025. Cited for 2026 IRMAA thresholds, standard and surcharge Part B and Part D premium figures, and the roughly 8% beneficiary estimate.
2. Request to Lower an Income-Related Monthly Adjustment Amount (IRMAA). Social Security Administration. Cited for Form SSA-44 and the life-changing-event appeal process.
3. Stonewood Financial Software Overview, Roth Done Right. Stonewood Financial, Inc. Accessed June 2026. Cited for how the software models multi-year Roth conversions and IRMAA cost. Available online: https://www.stonewoodfinancial.com/software/roth-done-right/
4. Stonewood Financial Software Overview, Total Tax Burden. Stonewood Financial, Inc. Accessed June 2026. Available online: https://www.stonewoodfinancial.com/software/total-tax-burden/
5. Stonewood Financial Software Overview, Legacy Done Right. Stonewood Financial, Inc. Accessed June 2026. Available online: https://www.stonewoodfinancial.com/software/legacy-done-right/