He Will Convert $120,000 to a Roth and Take Another $29,000 From the IRA to Pay the Tax. That Will Push Him Past $205,000 Into Medicare’s Higher Premium Bracket

A retiree with $60,000 of other income wants to convert $120,000 from a traditional IRA to a Roth before December 31. He has no spare cash for the tax bill, so he plans to pull another $29,000 from the same IRA to pay it. The conversion makes sense. The way he pays for it pushes his income just past a Medicare cliff.

Only about 8% of Part B enrollees pay Medicare’s income-related monthly adjustment amount (IRMAA). A single taxpayer at or below $109,000 of income ($218,000 joint) pays the standard $202.90 and faces none of this math. Retirees planning six-figure conversions usually sit well above that line.

Paying the Conversion Tax Creates More Income

Traditional IRA withdrawals and taxable Roth conversions generally count as income in the year they’re made. Medicare uses modified adjusted gross income (MAGI), which is adjusted gross income (AGI) plus tax-exempt interest. Municipal bond interest that feels tax-free still counts.

So the $29,000 lands on the same line as the conversion. It also generates its own tax. After the $16,100 standard deduction, his taxable income reaches $192,900, within the 24% bracket. The extra $29,000 withdrawal adds $6,960 in federal income tax, assuming no other deductions or adjustments.

Build the Bracket Math Carefully

Medicare surcharges work as cliffs. One dollar over a threshold triggers the entire next tier.

The lower-cost option still carries a surcharge. At $180,000, he already pays an extra $324.60 a month for Part B because his income exceeds $171,000. Crossing $205,000 adds $1,735.20 a year in combined Part B and Part D surcharges. His total surcharge at $209,000 reaches $6,355.20 a year. (The Centers for Medicare & Medicaid Services (CMS) lists the top premium as $649.20.)

Timing matters. Medicare uses a two-year lookback, so 2026 income sets 2028 premiums. CMS has not published 2028 brackets, which will shift with inflation, so the 2026 table serves as the best available guide. The surcharge lasts one year if income drops back. Form SSA-44 offers no relief: it covers income lost to events such as retirement, divorce or a spouse’s death, and a voluntary Roth conversion never qualifies.

One Extra Withdrawal, Two Ways to Pay

Pay from savings. Using existing cash to cover the $29,000 tax bill keeps MAGI at $180,000 and avoids another $6,960 in federal tax. Selling profitable stocks to raise the cash, however, can create taxable gains.

Reduce the conversion. If the tax must come from the IRA, he has $145,000 of total IRA distributions available before crossing $205,000. The conversion and the tax withdrawal both have to fit inside that number. He can convert the rest in 2027, when the lookback resets.

Withholding tax directly from the conversion changes nothing. The withheld amount still counts as a distribution.

Three Before-You-Convert Checks

1. Calculate MAGI with a margin. Add every IRA dollar, capital gain and muni coupon expected in 2026. Then stop the conversion a few thousand dollars below the next threshold, because a late December dividend can push you over.
2. Estimate the tax and name its source before you convert. Decide whether savings, a taxable account or the IRA pays the bill. Run the IRMAA math on whichever option you pick.
3. Price the conversion against 2028 Medicare costs. Couples get more room: the joint tier that matches his runs from $342,000 through $410,000. A surviving spouse files single, with thresholds roughly half the joint ones. That makes converting while both spouses are alive cheaper, as long as the household stays under its joint cliff.

The deadline for a 2026 Roth conversion is December 31. That income will affect his 2028 Medicare premiums, although the actual rates won’t be known until later.

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