The IRMAA Surprise That Costs 401(k) Holders $1,783 a Year in Hidden Medicare Premiums

A 63-year-old with $1.4 million in a traditional 401(k) starts running Roth conversion projections at the kitchen table. The plan looks clean on paper: convert $120,000 this year, pay the tax at 24%, and shrink the eventual RMD problem. Two years later, the Medicare bill arrives and the math breaks. This is the IRMAA trap, and it is the single most expensive mistake people in this balance range make in the run-up to age 65.

The mechanic almost no one prices in correctly: Medicare uses a two-year lookback on modified adjusted gross income. The income you report on your 2026 return determines your 2028 Part B and Part D premiums. A Roth conversion, a large 401(k) withdrawal, a capital gain harvest, or even a one-time bonus in your final working year can push you past a threshold that is invisible the day you trip it.

What the 2026 thresholds actually cost

For 2026, the standard Part B premium is $202.90 per month with no income adjustment. The first IRMAA tier kicks in at modified AGI above $109,000 for single filers or $218,000 for joint filers. Once you cross it, the surcharge stacks on top of the standard premium and stays there for the full calendar year.

Here is what the first IRMAA bracket adds to a household’s annual bill:

1. Part B surcharge: $81.20 per month per enrolled spouse, on top of the standard premium.
2. Part D surcharge: $14.50 per month per enrolled spouse, added to whatever your drug plan already charges.
3. Combined per-person hit: $95.70 a month, or $1,148.40 a year, for a single Medicare enrollee whose joint return crosses the threshold.

A married couple where only one spouse is on Medicare and the household lands just inside this tier ends up paying roughly $1,783 in combined Part B and Part D surcharges over a typical 18-month exposure window before the income drops back. Both spouses on Medicare in the same tier pay $191.40 per month combined, or $2,296.80 for the year. Cross into the second tier (joint MAGI above $274,000) and the Part B surcharge alone jumps to $202.90 per month per spouse.

Why this catches large 401(k) holders specifically

The thresholds adjust for inflation, but slowly. CPI sat at 334.0 in May 2026, up from 321.4 a year earlier, and IRMAA brackets are now tied to that index. The catch: a $1.4 million traditional 401(k) compounding at a typical balanced-portfolio rate throws off meaningful unrealized growth each year, and your first RMD at 73 on that balance can easily push joint MAGI past $218,000 once Social Security is layered on top. The bracket creep is slower than the portfolio creep.

The Fed has held the funds rate at 3.75% since December, which is compressing bond yields just as healthcare costs keep climbing. National healthcare spending hit $3,700.1 billion in April 2026, up from $3,494.0 billion a year earlier. Premium inflation is the headwind retirees feel most directly, and IRMAA is the part you can actually control.

Three moves that pay for themselves

1. Map your two-year lookback before you convert. If you are 63 now, your 2026 return drives your 2028 premiums. Run a projection that includes Roth conversion income, capital gains, and any final-year wages, then size the conversion to land at least $5,000 below the $218,000 joint or $109,000 single line. A two-year conversion ladder usually beats one large conversion for this reason alone.
2. Use Qualified Charitable Distributions once you hit 70½. A QCD counts toward your RMD but is excluded from MAGI, which is the only line that matters for IRMAA. For a retiree already giving to charity, redirecting $20,000 of an RMD through a QCD can be the difference between staying in the standard premium tier and paying the surcharge.
3. File Form SSA-44 after a life-changing event. Retirement itself counts. If your 2026 income reflects your final year of work but you stop earning in 2027, you can ask Social Security to use your current lower income instead of the two-year-old return. Most people in this balance range never file it.

The standard deduction for joint filers is $32,200 in 2026, which gives most couples meaningful room to plan around. The $1,783 surcharge is the easiest avoidable expense in a seven-figure retirement plan. The hard part is remembering that the bill arrives 24 months after the decision that triggered it.