A Single Retiree With a $2 Million IRA Crosses Medicare’s $109,000 Surcharge Line on the First RMD Alone. The $75,000 Withdrawal Plus a $40,000 Social Security Check Lands $500 Over It, and Here’s What the Wealthy Do in Their 60s to Stay Under
One small IRA withdrawal flipped a retiree's Medicare premiums by more than a thousand dollars a year, and the only thing separating her from safety was a $500 charitable gift she never made. The wealthy figured this out years before…
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Consider a 73-year-old single retiree. She’s an illustrative composite, but her numbers are common. She saved steadily, let her tax-deferred retirement account compound to $2 million and receives $40,000 a year from Social Security. Then the IRS required her first withdrawal from the IRA, and Medicare took note.
That one withdrawal, added to her benefits, puts her about $472 over the $109,000 line where Medicare’s high-income surcharge starts for single filers in 2026. Those $472 cost her about $1,148 a year. Below is the math, plus the moves richer retirees make in their 60s to stay under.
How a $2 Million IRA Forces a $75,000 Withdrawal
The IRS calls these required minimum distributions, or RMDs. The SECURE 2.0 Act raised the starting age to 73 for anyone born on or after January 1, 1951, and the same law later pushes it to 75 for younger retirees. The rule lives in Section 401(a)(9) of the tax code.
To find it, take the IRA’s value on December 31 of the prior year and divide it by the factor for your age in the IRS Uniform Lifetime Table, which appears in Publication 590-B. The table’s age-73 factor is 26.5. So $2 million divided by 26.5 comes to $75,472, and every dollar of it is taxable income.
Why Only $34,000 of Her Social Security Counts
Medicare tests a figure called modified adjusted gross income (MAGI). Social Security factors into that figure only to the extent it’s taxable. Under IRS rules, up to 85% of benefits become taxable once half your benefits plus your other income tops $34,000 for a single filer. Her RMD goes far past that, so she hits the maximum.
| Line Item (Single Filer) | Amount |
|---|---|
| First RMD ($2,000,000 / 26.5) | $75,471.70 |
| Taxable Social Security (85% of $40,000) | $34,000 |
| MAGI | $109,471.70 |
| 2026 surcharge threshold | $109,000 |
| Amount over | $471.70 |
A $472 Overage Triggers a $1,148 Bill
The surcharge is officially the Income-Related Monthly Adjustment Amount, or IRMAA. At or below $109,000, she pays the standard 2026 Part B premium of $202.90 a month. Just over the line, Part B jumps to $284.10, and her drug plan picks up a $14.50 monthly surcharge.
IRMAA works as a cliff. One dollar over the line reprices the whole year. That makes the extra charges about 243% of the $472 that set them off.
The bill also comes late. Social Security sets premiums using your return from two years earlier, so a 2026 RMD shows up in 2028 premiums. The thresholds are adjusted for inflation each year, so the 2028 line will move, but by 2026’s measure she’s over. An RMD also doesn’t qualify for the Form SSA-44 appeal, which covers life-changing events such as work stoppage.
Delaying adds its own risk: she can push her first RMD to April 1 of the following year, but then she takes two RMDs in one year. That brings MAGI toward roughly $185,000, inside a tier where Part B costs $527.50 a month.
What the Wealthy Do in Their 60s to Stay Under
- Roth conversions in the gap years. Between retirement and RMD age, smart retirees move portions of the IRA into a Roth and pay tax at brackets they choose. If she had reduced the IRA to $1.5 million before her RMD year, her first RMD would have been about $56,604, and MAGI would have been roughly $90,604. One catch: conversions count toward MAGI too, and because of the lookback, income from age 63 onward affects premiums. Retirees using this approach often size each year’s conversion to finish just under a tier.
- Qualified charitable distributions (QCDs). Starting at age 70½, the IRA custodian can send money straight to charity. The gift counts toward the RMD and stays out of income, up to $108,000 for 2025. For her, a $500 QCD pulls MAGI back under the line.
- Monitoring the hidden income. Municipal bond interest is exempt from federal income tax but still counts in MAGI for IRMAA, and so do capital gains. In an RMD year, retirees within a few hundred dollars of a line delay sales and harvest losses.
IRMAA is federal. State tax on her RMD depends on where she lives, since states treat retirement income very differently.
Timing conversions, gifts and withdrawals across several years is worth working through with a CPA or fiduciary advisor before you turn 63.
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Vilma Rios is a tax professional and tax content contributor with more than 15 years of experience in tax and accounting. She specializes in federal tax research, tax education, and translating complex tax rules into clear, practical information for individuals, families, and small-business owners.
Vilma is a Content Tax Contributor II with the National Association of Tax Professionals (NATP), where she contributes to tax education and professional content. She has also presented tax information through webinars, including Spanish-language tax education, and has appeared on Telemundo 47 discussing tax topics and helping viewers understand important tax-filing requirements.
Her experience also includes tax and accounting work, tax research, IRS-related matters, and public tax education. While in college, Vilma volunteered in an IRS-sponsored tax assistance program and was recognized for her community service by local and state officials.
Known as “Your Tax Geek,” Vilma is passionate about making taxes easier to understand and helping people navigate an increasingly complex tax system.
