A Roth Conversion Can Trigger a Medicare Surcharge. Retiring Qualifies for an Appeal. Converting Doesn’t.

A Roth conversion adds the converted amount to your income for the year, and Medicare uses that income to set your premiums for a later year. Many people convert in the same year they stop working and expect Social Security’s appeal process to cancel any surcharge that follows. The appeal only removes part of it.

Conversion Income Counts Toward Medicare’s Income Test

Under the tax code, money moved from a traditional IRA to a Roth IRA is included in gross income to the extent it would be includible were it not part of a qualified rollover contribution (26 U.S.C. § 408A(d)(3)(A)(i)). Treasury treats any converted amount as a distribution from the traditional IRA and a qualified rollover contribution to the Roth IRA, even when it moves by trustee-to-trustee transfer (26 CFR 1.408A-4(c)). IRS Publication 17 for tax year 2025 confirms that a part or all of the conversion contribution from your traditional IRA is included in your gross income.

Medicare’s income-related monthly adjustment amount (IRMAA) is based on modified adjusted gross income (MAGI), meaning adjusted gross income plus tax-exempt interest income. Social Security uses the most recent tax data the IRS can provide, which is generally from two years prior. So 2026 premiums are generally based on 2024 tax return information, and a conversion done in 2026 shows up on the return that generally sets 2028 premiums.

2026 Surcharges Climb Fast Above the First Threshold

The standard Part B premium is $202.90 a month for 2026. According to CMS, income-related adjustments affect roughly 8% of Part B members. Here are the 2026 levels:

Retirement Qualifies for an Appeal. A Conversion Does Not.

After a life-changing event, Social Security lets you ask for a new determination based on a more recent tax year. You can file that request on the optional Form SSA-44. Federal regulations list the qualifying events: your spouse dies; you marry; your marriage ends through divorce or annulment; you or your spouse stop working or reduce hours; certain losses of income-producing property that were not at your direction; scheduled cessation, termination, or reorganization of an employer’s pension plan; and certain employer settlements. A voluntary Roth conversion is not on the list. A new determination also uses your MAGI for the more recent year, and that figure includes any conversion income.

A Hypothetical Couple Shows Where the Appeal Stops

Example household: a married couple filing jointly, both enrolled in Part B and Part D.

• 2024 income: $200,000 of wages plus $100,000 of pension and investment income equals $300,000 of MAGI. That puts them in the 2026 joint levels of over $274,000 up to $342,000: $405.80 a month each for Part B, plus a $37.50 Part D adjustment each.
• 2026 events: both stop working in January, which counts as a qualifying event, and they convert $200,000.
• Appeal estimate: $100,000 + $200,000 = $300,000. The wages are gone, but the conversion fills the gap. They stay in the same levels, so the appeal changes nothing.
• Smaller conversion: $100,000 + $100,000 = $200,000, which is under $218,000. The appeal brings down each spouse to $202.90.

Here is what the larger conversion costs for 2026. The Part B adjustment is $202.90 × 12 = $2,434.80 per person. Times two, that is $4,869.60. Part D adds $37.50 × 12 × 2 = $900. The total is $5,769.60. Whichever amount they convert, it also lands on the 2026 return, which generally sets 2028 premiums. The 2028 levels have not been published yet.

Planning Conversions Around a Tier

In the example, the couple has $218,000 − $100,000 = $118,000 of room before the 2026 joint threshold. Each levels works like a cliff. Under CMS’s phrasing, income greater than $218,000 causes the full first-tier surcharge, so going over by $1 costs the same as going over by much more. Leave a buffer for year-end fund distributions, capital gains and tax-exempt interest, which counts toward MAGI.

Considering a One-Time Surcharge Against Long-Term Tax Savings

A surcharge for one premium year is a fixed, known cost. Compare it with the tax you expect to save over the years the Roth money grows untaxed (the quiet years between your last paycheck and your first RMD are often the cheapest window for this, which we sized up in a free Roth conversion guide). Conversions tend to fit people who:

• Expect the same or a higher tax bracket later, including after required distributions begin
• Can pay the conversion tax from money outside the IRA
• Have a long time horizon or plan to leave the account to heirs

They tend not to suit people who:

• Expect a lower bracket in retirement
• Would have to take money out of the IRA to pay the tax
• Need the money soon
• Would stay over a levels year after year from repeated large conversions

Appeal Deadlines and Next Year’s Numbers

If Social Security’s letter sets your premium using a working year’s income, an SSA-44 for the year you stopped working can remove the wages from the calculation. A determination is generally not retroactive to a prior premium year. The exception: if the event happened in the last three months of that year, you must file by March 31 of the current premium year. The 2026 figures were released November 14, 2025, and new levels come out each fall. Check the new levels before you planning a conversion, because no appeal will remove the conversion income.

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