RMD Tax Trap: How $122,000 in 401(k) Withdrawals Can Cost You $42,000 in IRMAA Surcharges Alone

Margaret turned 75 in March and took her first required minimum distribution from a $3 million traditional 401(k). Using the IRS Uniform Lifetime Table divisor of 24.6 for age 75, that first RMD came to roughly $122,000. She had budgeted for the federal income tax. She had not budgeted for the Medicare premium surcharges that same withdrawal will trigger two years later, or the ones already locked in for the two RMDs that follow.

The cliff her CPA never mentioned

Margaret’s husband is also Medicare-eligible. Between his pension, both Social Security checks, dividends on a sizable taxable brokerage account, and her new RMD stacked on top, their projected modified adjusted gross income clears the top joint IRMAA tier. For 2026, that tier kicks in for couples with modified adjusted gross income at or above $750,000, and the consequences are immediate and total.

In that top bracket, each spouse pays an extra $487 per month in Part B IRMAA on top of the standard Part B premium of $202.90, bringing the combined monthly Part B cost to $689.90 per person. Add the Part D income-related adjustment of $91 per month at that same tier, and each spouse is paying $578 per month in surcharges alone. For the household, that is $1,156 per month, or $13,872 per year, before the standard premiums everyone pays are even counted.

Why three RMDs equal three IRMAA years

The two-year lookback is what makes this an ambush. The $122,000 RMD Margaret took in 2026 sets her 2028 Medicare premiums. The age-76 RMD next year, using divisor 23.7 on a portfolio that grew, drives 2029 premiums. The age-77 RMD, divisor 22.9, drives 2030 premiums. Three withdrawals, three full years at the top household IRMAA, and the surcharge tab lands at roughly $42,000 before a single federal income tax dollar is counted.

The federal income tax bill compounds the damage. Each RMD dollar runs through the 2026 brackets, where joint filers enter the 24% rate above $211,400 and the 32% rate above $403,550. With 85% of Social Security drawn into taxable income, the effective marginal rate on the last RMD dollars can approach 40%. IRMAA is the surprise. The bracket compression, quietly built into the tax code, is the punchline.

Why the brackets matter more than the rates

IRMAA tiers operate as hard cliffs. One dollar over a threshold reprices Medicare for the entire calendar year, for both spouses. Dropping from the top tier into the next one down (the bracket covering $410,000 to $750,000) saves the couple roughly $2,800 per year in combined IRMAA. That math makes income management in November and December the highest-return hour of work a 75-year-old can do. Couples who discover they are within striking distance of a lower tier can appeal an IRMAA determination using IRS Form SSA-44 if a qualifying life-changing event, such as retirement or a significant income reduction, has occurred since the lookback year.

Three moves that change the number

1. Use a qualified charitable distribution to shave the RMD before it lands in MAGI. A QCD sends money directly from a traditional IRA to a qualified charity, satisfying part of the RMD without adding a dollar to taxable income. The 2026 QCD limit is $111,000 per person, and the strategy works from an IRA, not a 401(k) directly, so a rollover to a traditional IRA is the required first step. The One Big Beautiful Bill Act also made QCDs more powerful in 2026 by restricting certain itemized charitable deductions, making the income exclusion route even more advantageous. For Margaret, even a $40,000 QCD could pull reported income below the top IRMAA cliff and recover the surcharge for the year it affects.
2. Treat any remaining Roth conversion window as a one-time opportunity. Once RMDs begin, every converted dollar stacks on top of forced income, and the two-year lookback still bites. Margaret’s conversion runway has effectively closed; the lesson is that conversions are most efficient in the years before RMDs begin, when income is low and account balances are still growing tax-deferred.
3. Re-run the MAGI projection every November. If projected joint income sits within $25,000 of the next IRMAA cliff, accelerating deductible medical expenses, deferring realized gains, or layering a QCD on top of the RMD can drop the household into a lower tier. The break-even on professional advice arrives quickly: at the top tier, every $1,000 of MAGI reduction is worth roughly $30 in saved IRMAA.

Margaret cannot undo the 2026 RMD. She can keep 2027 and 2028 from compounding the bill. If projected household MAGI exceeds the first joint IRMAA threshold of $218,000, the planning math alone justifies engaging a fee-only advisor who specializes in retirement-income sequencing. The surcharges are the price of not knowing the brackets existed.

Editor’s note: This article was updated to add the 2026 standard Medicare Part B premium of $202.90 per month for context on the total premium at each tier, to clarify that qualified charitable distributions require a traditional IRA rather than a 401(k) directly, and to note how the One Big Beautiful Bill Act’s 2026 changes to itemized charitable deductions make QCDs more advantageous.

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