A retiree can make one ordinary-looking income move in 2026 and feel the Medicare impact in 2028. A CD ladder matures, taxable interest rises, the proceeds move into a money market fund, and the tax return looks routine. Then, two years later, Medicare’s IRMAA formula can turn that old income spike into more than $1,100 in extra annual premiums.
This is the risk for retirees in the years before required minimum distributions begin. RMDs generally start at 73 for people born from 1951 through 1959 and at 75 for people born in 1960 or later. During those years, voluntary income choices such as CD cash-outs, Roth conversions, taxable investment sales, and taxable home-sale gains can quietly set up a Medicare premium increase two years later.
Who this actually applies to
IRMAA affects roughly 8% of people with Medicare Part B. For 2026 premiums, the first surcharge starts when MAGI exceeds $109,000 for single filers or $218,000 for married couples filing jointly. The risk is highest for retirees near those thresholds, especially those planning to unwind a six-figure CD ladder, make a Roth conversion, sell appreciated assets, or otherwise create a one-year income spike.
A two-year lookback that reads a one-time event as permanent
IRMAA uses modified adjusted gross income from two tax years back. Your 2026 premium is generally set by your 2024 return; income from a CD ladder cashed out in 2026 would generally affect your 2028 premium. MAGI here is AGI, from Form 1040, line 11, plus tax-exempt interest, from line 2a. Municipal bond income that feels tax-free still counts, and so can CD interest once it is paid, credited, or otherwise currently taxable.
Consider a retiree with $70,000 in Social Security and pension income and a $400,000 CD ladder yielding around 4%. In ordinary years, she reports roughly $16,000 in interest and stays below the first IRMAA cliff. But if deferred interest, a taxable investment sale, or another income move pushes her MAGI to $115,000, she has cleared the $109,000 single threshold by $6,000.
Using the 2026 CMS schedule as an illustration, here is what crossing that threshold would cost if the same premium structure applied:
| 2026 MAGI (single) | Part B premium/month | Part D surcharge/month | Annual add vs. standard |
|---|---|---|---|
| ≤ $109,000 | $202.90 | $0 | $0 |
| $109,001 to $137,000 | $284.10 | $14.50 | about $1,148 |
The surcharge gets larger at higher income levels, and the same logic applies to married couples filing jointly, whose first 2026 IRMAA threshold starts above $218,000. The key point is that crossing even the first line by a few thousand dollars can add more than $1,100 to one person’s annual Medicare costs.
The traps hiding behind the cliff
The survivor bracket. When one spouse dies, the survivor starts filing single. The single thresholds are roughly half the joint ones. Household income has not moved. The bracket has. A widow who was safely inside the joint zero-surcharge tier can wake up owing the top-line $487.00 Part B surcharge on the same investment income her husband collected tax-free from IRMAA the year before.
SSA-44 covers only qualifying life events. The Social Security Administration accepts an IRMAA appeal only for a qualifying life-changing event: marriage, divorce, spousal death, work stoppage, work reduction, loss of income-producing property, loss of pension income, or an employer settlement. A voluntary CD cash-out does not qualify. Neither does a Roth conversion or a home sale. If the income was a choice, IRMAA is a bill.
Reinvestment still feeds MAGI. Rolling proceeds into I-bonds paying a 4.26% composite rate or a 1-year Treasury at 3.96% beats the 1.65% national CD average, but every dollar of that interest still lands in MAGI. Tax-exempt munis feel like an escape until you remember line 2a gets added back.
What to do
- Spread the maturity. If your ladder is stacked so multiple rungs pay accrued interest in one year, stagger the sales across two calendar years to keep MAGI on the cheaper side of the nearest bracket.
- Model the 2028 premium before you sell in 2026. If your projected MAGI lands within $10,000 of a threshold, deferring $20,000 of interest recognition into January saves more than the interest earns.
- If a qualifying life event actually applies (work stoppage, spousal death, pension loss), file SSA-44 within the year, with documentation. It will not undo a CD sale, but it will undo an IRMAA tier tied to income you no longer have.
Source note: 2026 premium and IRMAA figures are from the CMS fact sheet, “2026 Medicare Parts A & B Premiums and Deductibles,” and SSA Form SSA-44. The 2026 COLA is from SSA. I bond rates are from TreasuryDirect, and the national 12-month CD average and 1-year Treasury constant maturity rate are from FRED, using the latest available early-July 2026 data.
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