Roth Conversion and IRMAA: The Multi-Year Planning Guide for Financial Advisors

Back to Resources

Your client is 63 years old, recently retired, and you have planned a
$150,000 Roth conversion for 2026. The math looks clean: the conversion
fills the 24% bracket, generates about $26,000 in federal taxes, and
sets up a decade of tax-free growth.

Two years later, your client turns 65 and enrolls in Medicare. The
2028 IRMAA determination is based on 2026 MAGI. Your client has
approximately $130,000 in other retirement income, so the $150,000
conversion brought total MAGI to $280,000, pushing them from Tier 1 into
Tier 2. The surcharge jumps from $2,297 per year to $5,770 per year for
the couple, an increase of $3,473. And Roth conversions on their own are
not qualifying ‘life-changing events’ that qualify for an IRMAA
recalculation using form SSA-44.

The conversion still makes sense. But a $140,000 conversion would
have stayed in Tier 1 and cost $3,473 less in annual Medicare
surcharges. That last $10,000 of conversion produced roughly $2,400 in
federal tax savings (at 24%) but triggered $3,473 in additional IRMAA
costs, for a net loss of $1,073. The effective marginal rate on those
last $10,000: 58.7%.

This is the planning gap. Roth conversion optimization and IRMAA
planning are the same problem, viewed from different angles. Solving
them separately leaves money on the table.

---

How Roth Conversions Trigger
IRMAA

IRMAA (Income-Related Monthly Adjustment Amount) is a surcharge on
Medicare Part B and Part D premiums. It applies when a beneficiary’s
modified adjusted gross income (MAGI) exceeds specific thresholds. The
surcharge is determined annually based on MAGI from two years prior:
your 2026 income determines your 2028 IRMAA.

A Roth conversion is counted as ordinary income for both federal tax
and MAGI purposes. A $100,000 conversion adds $100,000 to MAGI, exactly
as if the client earned $100,000 in additional wages.

2026
IRMAA Brackets (Part B + Part D Combined, Married Filing Jointly)

MAGI Threshold (MFJ)	Annual IRMAA Per Person (B + D)	Annual IRMAA Per Couple
$218,000 or less	$0	$0
$218,001 to $274,000	$1,148	$2,297
$274,001 to $342,000	$2,885	$5,770
$342,001 to $410,000	$4,620	$9,240
$410,001 to $749,999	$6,355	$12,710
$750,000 or more	$6,936	$13,872

For the full bracket table including single filers and Part D
surcharges, see the IRMAA Brackets
2026 Guide.

The cliff structure is the critical detail. IRMAA is not graduated.
One dollar over the $218,000 threshold triggers the full Tier 1
surcharge of $1,148 per person per year. For a married couple, going $1
over costs $2,297. Going $1 over the $274,000 line costs $5,770 instead
of $2,297. These are cliffs, not slopes.

Advisor Takeaway: IRMAA operates on cliffs, not
gradual slopes. The planning implication: every Roth conversion must be
sized with precision relative to IRMAA thresholds. A $1 overshoot costs
$2,297/year for a couple. Build a safety margin of $2,000 to $5,000
below the threshold to account for unexpected investment income or
capital gains distributions.

---

The TCJA
Context: Why This Matters More in 2026

The Tax Cuts and Jobs Act (TCJA) reduced federal tax rates beginning
in 2018. As of 2026, Congress has made the TCJA individual rates
permanent under the One, Big, Beautiful Bill Act (OBBBA). The 2026
rates: 10%, 12%, 22%, 24%, 32%, 35%, and 37%.

While the rates are now permanent, two factors make Roth conversion
planning more urgent today than in previous years:

1. Rising Medicare costs. IRMAA thresholds are indexed
   to inflation, but Medicare premiums themselves have been rising faster
   than general inflation. The cost of being in the wrong IRMAA tier gets
   more expensive each year.
2. Portfolio growth compresses the conversion window.
   Every year a client delays conversions, the traditional IRA balance
   grows, RMDs at age 73 or 75 become larger, and the remaining bracket
   space for conversions shrinks. The optimal window for most retirees is
   between retirement and the start of Social Security, when taxable income
   is at its lowest.

The planning question is not “should we convert?” For most clients
with substantial traditional IRA balances, the long-term math favors
conversion. The question is “how much per year, and how do we avoid
IRMAA while doing it?” (For a full treatment of Roth conversion strategy
beyond the IRMAA dimension, see the Roth Conversion Strategy
2026 Guide.)

---

Multi-Year Planning
Framework

Optimizing Roth conversions with IRMAA awareness requires a
year-by-year view. Single-year analysis misses the cascading
effects.

The Four Variables

1. Current-year tax bracket. The conversion amount
   should fill remaining space in the target bracket after all other income
   is counted.
2. IRMAA threshold (two years forward). If the client
   will be on Medicare in two years, the conversion must stay below the
   relevant IRMAA tier.
3. Social Security provisional income. For clients
   already receiving Social Security, conversions increase provisional
   income, potentially pushing Social Security taxation from 50% to 85%.
   (More on this below.)
4. Future RMD pressure. Larger traditional IRA
   balances at age 73/75 mean larger forced distributions. Conversions done
   now reduce that pressure.

The Conversion Ceiling

For each year, the maximum optimal conversion is:

Conversion ceiling = MIN(top of target tax bracket, IRMAA
tier threshold) minus all other income minus the standard
deduction

For a client with $80,000 in combined Social Security and pension
income, targeting the 24% bracket ($206,700 top for MFJ, after standard
deduction of $30,000, effectively $236,700 in gross income) and subject
to IRMAA at $218,000 MAGI:

• Tax bracket ceiling: $236,700 gross income
• IRMAA ceiling: $218,000 MAGI
• Other income: $80,000
• Binding constraint: IRMAA at $218,000
• Maximum conversion: $218,000 minus $80,000 =
  $138,000

The tax bracket would allow $156,700 in conversions. IRMAA limits the
conversion to $138,000. The IRMAA constraint is the binding one, and
this is common for clients on Medicare.

Advisor Takeaway: For clients aged 63 or older,
always calculate both ceilings: the tax bracket ceiling and the IRMAA
ceiling. The lower of the two is the true maximum conversion. This is a
different calculation than for pre-Medicare clients, where only the tax
bracket matters.

---

Three Worked Examples

Example 1:
Pre-Medicare Client (Age 60, Retiring at 63)

Profile: David, age 60, married filing jointly.
Retiring at end of 2026. Traditional IRA: $900,000. Wife Karen, age 58,
earns $50,000 per year through age 62. No Social Security until age 67
for both. Medicare enrollment at age 65 for David (2031), age 65 for
Karen (2033).

The conversion ladder:

Year	David’s Age	Karen’s Wages	Roth Conversion	Total MAGI	Tax Bracket	IRMAA Concern?
2027	61	$50,000	$150,000	$200,000	22%	No (Medicare in 4 years)
2028	62	$50,000	$150,000	$200,000	22%	No (Medicare in 3 years)
2029	63	$0	$200,000	$200,000	22%	Yes. 2029 MAGI determines 2031 IRMAA (David’s first Medicare year). Stay under $218,000. Convert $200,000.
2030	64	$0	$210,000	$210,000	22%	Yes. 2030 MAGI determines 2032 IRMAA. Stay under $218,000.
2031	65	$0	$130,000	$130,000	22%	On Medicare. IRMAA based on 2029 MAGI ($200,000). Clear.

Strategy: Front-load aggressively in years 2027 and
2028 when IRMAA is not yet a constraint (David is not on Medicare until
2031, and the two-year lookback from 2027 income affects 2029, when he
is still not 65). In 2029, the IRMAA constraint binds because 2029
income will determine 2031 IRMAA (David’s first Medicare year). Dial
back to stay under the $218,000 threshold.

Total converted over 5 years: $840,000 of the
$900,000 balance. Remaining $60,000 can be converted in subsequent years
within IRMAA limits, or left to cover small RMDs starting at age 73.

Federal tax cost of conversions: Approximately
$172,000 over 5 years at an average effective rate of about 20.5%.

Tax-free growth on $840,000 for 25+ years at 6% real
return: $3.6M in tax-free assets by age 85. The $172,000 tax
paid now avoids estimated $700,000+ in future taxes on RMDs and
distributions. That is the value of the five-year window.

Example 2:
Already on Medicare (Age 67, Both Spouses)

Profile: Margaret and Tom, both age 67. Both on
Medicare. Combined Social Security: $58,000/year. Pension (Tom):
$32,000/year. Traditional IRA: $600,000. Investment income:
$12,000/year. No earned income.

Total baseline MAGI: $102,000 ($58,000 SS for MAGI
purposes + $32,000 pension + $12,000 investment income).

Note: Only the taxable portion of Social Security counts for AGI, but
for IRMAA purposes, MAGI adds back tax-exempt interest and includes the
total of adjusted gross income plus tax-exempt interest. Social Security
is included in MAGI at the amount included in AGI, which depends on
provisional income. For this example, we use the full figures for MAGI
estimation.

IRMAA-aware conversion amount:

• IRMAA Tier 1 threshold (MFJ): $218,000
• Available IRMAA headroom: $218,000 minus $102,000 = $116,000
• Base taxable income (MAGI minus $30,000 standard deduction):
  $102,000 minus $30,000 = $72,000
• 22% bracket ceiling (MFJ, taxable income): $206,700
• Available bracket space: $206,700 minus $72,000 = $134,700

Binding constraint: IRMAA at $116,000 (lower than
bracket space of $134,700).

Margaret and Tom can convert approximately $116,000 per year, staying
below the IRMAA Tier 1 threshold while remaining within the 22%
bracket.

What happens if they convert $1 more than IRMAA
allows?

If other income shifts pushed them to $217,999 MAGI and they convert
$2 more, crossing to $218,001:

• IRMAA surcharge: $1,148 per person per year x 2 = $2,297
• Federal tax on the extra $2: approximately $0.48
• Total cost of $2 in extra conversion:
  $2,297.48

The IRMAA cliff is not theoretical. $1 over costs $2,297 for a
couple. This is why projections need to include investment income
estimates, capital gains from rebalancing, and any other MAGI
components, not just the conversion amount.

6-year conversion plan at $100,000/year:

Year	Conversion	Cumulative	Remaining IRA	IRMAA Status
2026	$100,000	$100,000	$500,000	Below threshold
2027	$100,000	$200,000	$400,000	Below threshold
2028	$100,000	$300,000	$300,000	Below threshold (2026 MAGI check: clear)
2029	$100,000	$400,000	$200,000	Below threshold
2030	$100,000	$500,000	$100,000	Below threshold
2031	$100,000	$600,000	$0	Below threshold

Total federal tax: ~$132,000 over 6 years (average
effective rate ~22%). RMDs eliminated: Tom’s $600,000
traditional IRA would have generated RMDs of approximately $22,000/year
starting at age 73, growing to $35,000+ by age 80. All of that income is
now tax-free in the Roth.

Example
3: The Provisional Income Interaction (The “Tax Torpedo”)

Profile: Richard, age 66, single. Social Security:
$32,000/year. Traditional IRA: $400,000. Investment income: $6,000/year.
Considering a $50,000 Roth conversion.

Social Security taxation is determined by “provisional income,” which
is AGI (without Social Security) plus tax-exempt interest plus 50% of
Social Security benefits.

Before conversion: – Provisional income: $6,000
(investment) + $16,000 (50% of SS) = $22,000 – At $22,000 provisional
income (below $25,000 threshold for single filers), $0 of Social
Security is taxable

After $50,000 conversion: – Provisional income:
$6,000 + $50,000 + $16,000 = $72,000 – At $72,000 provisional income
(well above $34,000 upper threshold), 85% of Social Security is taxable
– Taxable Social Security: $27,200 (85% of $32,000)

The conversion did not just add $50,000 to taxable income. It added
$50,000 plus $27,200 in newly taxable Social Security, for a total
increase of $77,200 in taxable income. The effective marginal rate on
that $50,000 conversion is not 22%. When accounting for the Social
Security taxation trigger, the effective rate on the conversion dollars
near the provisional income thresholds can exceed 40%.

The planning response: For clients already receiving
Social Security, the conversion amount must be calculated net of the
Social Security taxation impact. The “tax torpedo” zone, where each
dollar of conversion triggers up to $0.85 of additional Social Security
taxation, occurs between $25,000 and $34,000 provisional income for
single filers ($32,000 and $44,000 for MFJ).

Options for Richard:

1. Convert $18,000. This keeps provisional income at
   $40,000, limiting taxable Social Security to 50% ($16,000) instead of
   85%. Smaller annual conversions over a longer period.
2. Convert $80,000. Accept the tax torpedo as a
   one-time cost, knowing that once the traditional IRA is converted,
   future years will have lower provisional income and less Social Security
   taxation. The math often favors this approach over a 15-year
   trickle.
3. Delay Social Security. If Richard has not yet
   claimed, deferring to age 70 creates a 4-year window with zero Social
   Security income, allowing larger conversions without the torpedo
   effect.

Advisor Takeaway: Roth conversions, IRMAA, and
Social Security taxation are not three separate planning topics. They
are one integrated problem. The conversion amount that looks optimal
from a bracket-filling perspective can be suboptimal once IRMAA
surcharges and Social Security taxation triggers are layered in. The
only way to find the true optimum is to model all three
simultaneously.

---

How Income Lab Models This

Income Lab’s Tax Lab integrates IRMAA bracket management directly
into Roth conversion optimization. The system runs 20 distribution
strategies simultaneously, with IRMAA brackets interleaved alongside
ordinary income tax brackets in the strategy selection. Advisors can
target a specific IRMAA tier and see the optimal conversion amount that
stays below the threshold while maximizing bracket filling. The two-year
lookback is modeled automatically, so the IRMAA impact of a 2026
conversion appears in the 2028 projection.

Penny extends this further with a multi-year Roth conversion planner
that accounts for IRMAA thresholds across the full planning horizon,
including the transition years around Medicare enrollment. Rather than
modeling each year in isolation, the tool projects how this year’s
conversion affects next year’s brackets, the year-after’s IRMAA status,
and the long-term RMD trajectory, all connected to the client’s actual
plan data.

---

Frequently Asked Questions

How does a
Roth conversion affect Medicare premiums?

A Roth conversion increases MAGI in the conversion year. IRMAA uses a
two-year lookback, so a 2026 conversion affects 2028 Medicare premiums.
If the conversion pushes MAGI above an IRMAA threshold, the Medicare
Part B and Part D surcharges apply for that entire year. The surcharges
are per person, so a married couple pays double.

Should I
do a Roth conversion before going on Medicare?

For many clients, the two to three years before Medicare enrollment
at age 65 represent the most valuable conversion window. Conversions in
these years can be sized aggressively without IRMAA concern (because the
client is not yet on Medicare). Once on Medicare, the two-year lookback
means income from ages 63 and 64 determines first-year and second-year
IRMAA. Planning for the lookback should begin at age 61 or 62.

What are the 2026 IRMAA
thresholds?

For married filing jointly, the Tier 1 threshold is $218,000 MAGI.
For single filers, it is $109,000. Full bracket tables with all tiers,
Part B premiums, and Part D surcharges are available in the IRMAA Brackets 2026 Guide.

How much should I
convert to Roth each year?

The optimal amount depends on the client’s other income, target tax
bracket, IRMAA threshold (if age 63+), Social Security provisional
income, and the number of years remaining before RMDs begin. There is no
single right number. The goal is to fill available bracket space each
year, stay below IRMAA cliffs (when applicable), and convert enough to
meaningfully reduce future RMDs. For most clients, the answer is
somewhere between $50,000 and $200,000 per year during the optimal
window.

---

Getting Started

Roth conversion planning that accounts for IRMAA is not optional for
clients with significant traditional IRA balances and Medicare on the
horizon. The interactions between brackets, IRMAA tiers, and Social
Security taxation create a planning surface that requires year-by-year
modeling.

For a broader look at the tools that handle this analysis, see our
guide to Roth conversion
planning software and the best Roth conversion software for
advisors comparison.

If you are looking for a tool that handles all three dimensions
simultaneously, connected to the client’s actual financial plan, book a walkthrough to see how Income Lab approaches
multi-year Roth optimization with integrated IRMAA bracket
management.

---

---

Sources

• Medicare IRMAA Brackets: CMS Medicare Parts B and D Income-Related
  Monthly Adjustment Amounts, 2026
• 2026 Federal Tax Brackets per IRC Section 1, as adjusted for
  inflation (IRS Revenue Procedure)
• Social Security Provisional Income Thresholds: IRC Section 86
  (unchanged since 1993; not inflation-indexed)
• TCJA and OBBBA rate provisions: One, Big, Beautiful Bill Act (2025),
  making TCJA individual rates permanent
• IRMAA Two-Year Lookback: Social Security Act Section 1839(i) and 42
  CFR 408.22

---

All tax estimates in this article use 2026 federal tax brackets
and standard deduction amounts. IRMAA brackets are based on 2026
published thresholds. Calculations are for illustrative purposes only
and should not be relied upon as tax advice. Consult a qualified tax
professional for client-specific guidance.

All trademarks are property of their respective owners.