A $2.25 Million Portfolio, Two Withdrawal Plans: One Triggers IRMAA and RMD Taxes, One Never Does

Two retirees hold identical $2.25 million portfolios. Both own the same seven positions in the same weights, and both draw roughly $10,800 a month in income. One will pay Medicare IRMAA surcharges and take forced RMDs for life. The other will not. The only difference is which account holds the money.

The portfolio blends a broad high-dividend equity sleeve, a dividend-growth sleeve, and a municipal bond sleeve with four income specialists: NEOS Nasdaq-100® High Income ETF (NASDAQ:QQQI), Blue Owl Capital (NYSE:OBDC | OBDC Price Prediction), iShares 0-3 Month Treasury Bond ETF (NYSEARCA:SGOV), and STAG Industrial (NYSE:STAG). Blended yield: 5.8%, producing roughly $130,500 a year on $2.25 million.

Same Portfolio, Two Very Different Tax Bills

Plan A holds everything inside a traditional IRA. Every dollar you withdraw is ordinary income. Once the owner turns 73, the IRS requires annual minimum distributions, regardless of what the portfolio pays in dividends. That withdrawal lands on the same 1040 as Social Security, and it counts toward modified adjusted gross income. MAGI drives Medicare’s income-related surcharges.

For 2026, a single filer with MAGI above $109,000 owes at least $81.20 a month in Part B IRMAA plus $14.50 a month in Part D IRMAA. Joint filers hit that first tier at $218,000. A single retiree pulling $130,500 out of an IRA is inside the surcharge zone, and layering Social Security on top can push them into higher brackets where the Part B surcharge climbs to $202.90 or $324.60 a month.

Plan B holds the same seven positions in a taxable brokerage account (or a Roth). No RMDs. Municipal bond interest is exempt from federal tax. Treasury interest from SGOV is exempt from state tax. Qualified dividends are taxed at long-term capital gains rates, which sit at 0% below $100,800 of taxable income for joint filers in 2026. Same $130,500 in cash flow. Different taxable MAGI. IRMAA never triggers.

Where the Yield Actually Comes From

1. Conservative sleeve (roughly 3% to 4%). SGOV tracks short T-bills; the 13-week yield averaged 4%, and SGOV’s trailing 12-month distribution total was 3.71 dollars per share. That interest is federally taxable but state-tax exempt. A municipal bond sleeve and a dividend-growth equity sleeve round out this tier.
2. Moderate sleeve (roughly 5% to 7%). STAG pays a $0.3875 quarterly dividend, or $1.55 per share annualized, against a recent price near $37.61. REIT distributions are non-qualified and taxed as ordinary income, which matters far more in a taxable account than most investors realize.
3. Aggressive sleeve (roughly 10% to 14%). QQQI’s trailing 12-month distributions totaled 8.28 dollars per share against a recent price of $54.39. A meaningful slice posts as return of capital: QQQI’s Form 8937 shows 94% of fiscal 2024 distributions classified that way. That lowers current-year tax but reduces cost basis. OBDC yields near 12.5%, though the fund cut its regular quarterly base dividend from $0.37 to $0.31 earlier this year as spreads compressed.

Account Location Beats Yield Chasing

The blended 5.8% is the same number in either account. What differs is what the IRS sees. Inside a traditional IRA, everything eventually exits as ordinary income at your top marginal rate. Outside one, muni interest and qualified dividends can pass through your return at 0% federal tax, and no RMD forces withdrawals you don’t need.

The 2026 standard deduction for married couples filing jointly is $32,200. The 12% bracket ends at $100,800 for that filer, where 22% takes over. A properly located version of this portfolio can deliver the same monthly income while a fully IRA-held version pays IRMAA every year plus ordinary rates on every dollar.

Three Moves Worth Making Before Year-End

1. Map each holding to the account type that fits its tax character. Munis and Treasuries belong in taxable; REITs like STAG and BDCs like OBDC belong in a Roth or IRA, where their ordinary-income distributions never hit your MAGI.
2. Project MAGI two years forward. IRMAA uses a two-year lookback, so 2026 income drives 2028 Medicare premiums. A Roth conversion this year that lifts MAGI above $109,000 single or $218,000 joint will show up on a premium notice.
3. Model the RMD wave before it starts. Every dollar you convert or withdraw from a traditional IRA in your 60s is a dollar the IRS cannot force out at 73, when Social Security and portfolio growth may already be stacking your MAGI into the highest IRMAA brackets.

That last point is the whole ballgame for anyone with a large pre-tax balance. We walked through how to defuse the first-year RMD tax bomb, years before it lands, in a free guide to the Roth conversion window between your last paycheck and age 73.

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