Home Depot Executive Says Housing Market Is Frozen. A Retiree Who Pulls $50,000 From Her 401(k) for a Kitchen Remodel Could See Higher Medicare Premiums in Two Years

Home Depot (NYSE:HD | HD Price Prediction) keeps reporting a housing market that won’t move. On its August 18, 2026 earnings call, CFO Richard McPhail said housing turnover “has never been lower as a percentage of the housing stock” and pointed to “frozen housing market conditions.” With mortgage rates elevated, homeowners who locked in lower rates years ago have little incentive to move and take on a more expensive loan. For some, putting money into renovations makes more sense than buying another house.

Consider a 68-year-old widow earning $80,000 who withdraws $50,000 from her traditional 401(k) for a kitchen remodel. She faces an immediate income-tax consequence, followed by a potential Medicare premium increase in 2028.

Only about 8% of Part B members pay this income surcharge, called IRMAA. If your income stays well under $109,000 single or $218,000 joint even after a withdrawal, the Medicare half of this story passes you by.

How a 401(k) Withdrawal Lands on Your Medicare Bill

Withdrawals from a traditional, pretax 401(k) generally count as taxable income in the year you take the money. Her $50,000 withdrawal therefore raises her adjusted gross income (AGI). IRMAA uses modified adjusted gross income (MAGI): AGI from line 11 of Form 1040 plus tax-exempt interest from line 2a. Municipal bond interest that escapes income tax still counts.

Borrowing against the house leaves MAGI alone because loan proceeds never show up as income. At today’s rates, though, she pays for that in interest.

How $50,000 in 2026 Becomes a 2028 Surcharge

The agency generally uses tax data from two years before the premium year, so 2026 income can affect 2028 Medicare premiums. Measured against 2026 brackets, per person:

The lump sum puts her $21,000 above the 2026 threshold. At $109,000, she pays the standard $202.90 Part B premium. Even one dollar above that line raises it to $284.10 under current rules. She still sits $7,000 below the next bracket, where Part B costs $405.80 a month.

Two warnings. Thresholds rise with inflation. The single line rose from $97,000 in 2023 to $109,000 in 2026, so the 2028 line will probably sit higher. Income tax also hits first. Her withdrawal could also push part of her income into the 24% tax bracket, which begins at $105,700 in taxable income for single filers in 2026. Additional deductions available to people 65 and older could lower her final tax bill.

Widowhood can make the calculation worse. As a single filer, she faces a $109,000 threshold, compared with $218,000 for a married couple filing jointly. Her $130,000 income would trigger a surcharge as a single filer, but not on a joint return.

Form SSA-44 generally won’t help with a voluntary 401(k) withdrawal. Social Security reserves IRMAA relief for qualifying life changes, including retirement, fewer work hours, marriage, divorce or the death of a spouse.

IRMAA is one of several Medicare costs that catch retired people off guard once income moves a threshold. We mapped out the surcharges and the coverage gaps that go with them in a free Medicare guide.

Four Ways to Pay for the Kitchen, Compared

• Cash savings. Spending money already in the bank adds nothing to MAGI. Selling appreciated stock in a taxable account does add capital gains.
• Staged renovation. Withdrawing $25,000 in each of two years would keep her income at $105,000 annually, assuming her other income stays unchanged. That’s below the 2026 IRMAA threshold and could help her avoid higher premiums and tax brackets.
• Roth money. Qualified Roth IRA distributions stay out of gross income (26 U.S.C. § 408A(d)(1)), and so do qualified Roth 401(k) distributions (§ 402A(d)(1)). That makes Roth money the clearest source, but it uses up the account with the best long-term tax treatment.
• Home equity. Borrowing doesn’t increase MAGI, but interest can outweigh the Medicare savings. At an illustrative 7.32% rate, $50,000 would generate about $3,660 in annual interest before accounting for repayments. Actual home-equity loan rates and costs will vary.

The best option depends on her savings, borrowing costs and income. For this widow, splitting the withdrawal could reduce both her income taxes and future Medicare premiums.

Run the Numbers Before You Request a Lump Sum

1. Estimate your 2026 MAGI early. Start with line 11 plus line 2a from your 2025 return, add every planned 2026 withdrawal, and compare the total to $109,000 single or $218,000 joint. If it moves, take part of the money in December and the balance in January 2027. The contractor never knows the difference.
2. Call your 401(k) administrator before you file the request. Ask whether your plan permits partial withdrawals and how much tax it deducts, because plan rules decide whether splitting the withdrawal works.
3. If you’ve already taken the lump sum, prepare for a possible premium increase. Medicare recalculates IRMAA annually, so lower income in 2027 could bring your premiums back down in 2029.

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