A 68-Year-Old Retired Nurse Learns $920,000 Pension Pushes Her Into IRMAA Tier Two

Margaret retired from a hospital nursing career at 66 with a defined-benefit pension of about $55,000, a 403(b) and IRA worth roughly $780,000, a taxable brokerage account, and a Social Security benefit near $30,000. She timed her Part B enrollment perfectly, chose Original Medicare with a Plan G supplement, and never missed a deadline. This spring, her Social Security statement showed a deduction line she had never seen before. Her Part B premium had jumped from the standard rate to something far higher, and her Part D plan tacked on its own surcharge as well. She had crossed an IRMAA threshold two years earlier without realizing it.

Roughly 7% to 8% of Medicare Part B enrollees pay any IRMAA surcharge at all, according to the Medicare Trustees Report. But Margaret’s situation is common among single retirees who combine a mid-career pension with a healthy 403(b) balance.

How the Tier 2 Cliff Works

IRMAA uses a two-year income lookback. The premium Margaret pays in 2026 is determined by her 2024 tax return: adjusted gross income from Form 1040 line 11, plus tax-exempt interest from line 2a. Municipal bond income that felt tax-free still counts toward that total. The brackets operate as cliffs, so one dollar over a threshold moves a beneficiary into the next tier for the entire calendar year.

For a single filer in 2026, the tiers look like this:

Margaret’s 2024 return showed her $55,000 pension, the taxable portion of her Social Security (roughly 85% of the benefit), and a $60,000 IRA withdrawal she took to renovate her kitchen and pay off her car. Taken together, her MAGI cleared $137,000 by a few thousand dollars. That single step into Tier 2 replaced her standard $202.90 Part B premium with $405.80 per month, and layered a Part D IRMAA surcharge on top of her drug plan premium. On an annual basis, the Part B piece alone runs into the low four figures. Had she kept her MAGI under $137,000, she would have paid the lower Tier 1 surcharge of $81.20 per month instead.

Married couples face roughly double the single-filer income thresholds. When one spouse dies, the survivor files as single the following year, and the same household income that once fit comfortably under the joint limit can now trigger IRMAA outright, or push the survivor into a higher tier. Margaret is already single, so she lives inside those tighter brackets every year. A pension that would sit safely below the joint threshold can push a single filer close to Tier 1 before a single IRA withdrawal is factored in.

What Margaret Can Do Now

The 2024 return is closed. The 2025 return determines her 2027 premium, and 2026 income sets 2028. Both years are still controllable.

• Manage Withdrawals to the Cliff. Model this year’s projected MAGI against the $137,000 Tier 2 line and the $109,000 Tier 1 line. A large one-time purchase funded with a taxable IRA draw can cost more in IRMAA surcharges over the next two years than the interest on a short bridge loan.
• Plan for QCDs Once RMDs Begin. Required minimum distributions start at age 73 for Margaret under SECURE 2.0. Qualified charitable distributions from an IRA (available starting at 70½) satisfy RMDs without adding to MAGI, so a charitably inclined retiree can trim IRMAA exposure at the same time. The annual QCD limit is $111,000 per person in 2026, inflation-indexed under SECURE 2.0, giving retirees with larger IRAs meaningful room to redirect required withdrawals to charity.

If projected MAGI sits within about $20,000 of the next tier, a fee-only advisor who models Medicare surcharges alongside tax brackets can evaluate whether a partial Roth conversion in a lower-income year saves money net of the two-year IRMAA hit it creates. The permanent extension of current tax rates under the One Big Beautiful Bill Act (signed July 4, 2025) does not change IRMAA thresholds, but it does stabilize the tax-bracket math that governs Roth conversion decisions through at least 2033. Margaret should draw from the taxable brokerage account first and keep the 403(b) spigot barely cracked until the combination of pension and Social Security brings her MAGI back under the Tier 1 line.

Editor’s note: This article was updated to reflect that roughly 7% to 8% of Part B enrollees pay IRMAA surcharges (per the Medicare Trustees Report), a more precise figure than previously stated, and to include the inflation-indexed 2026 QCD annual limit of $111,000 and relevant context from the One Big Beautiful Bill Act’s permanent extension of current tax rates.

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