The Trap Hiding in a 10-Year Deadline
Picture a 68-year-old who inherited a $600,000 traditional IRA from a parent two years ago. Under the SECURE Act, non-spouse beneficiaries must empty the account within 10 years. She has been letting it grow, planning to pull the whole thing out in year 10 to keep things simple. What she doesn’t realize is that plan will cost tens of thousands of dollars, and most of the damage will land on her Medicare premium, not her tax bill.
Retirement forums are full of similar scenarios: take equal chunks each year, wait until the end, or hold out for a low-income year. The answer usually hinges on one acronym most people never hear until it starts eating their Social Security check: the Income Related Monthly Adjustment Amount, or IRMAA.
Why IRMAA Is the Real Cost
Every dollar pulled from an inherited traditional IRA counts as ordinary income. Pull all of it out in a single year and modified adjusted gross income (MAGI) can jump by six figures. Medicare uses that income, from two years earlier, to decide how much extra you pay for Part B and Part D.
In 2026, a single filer with MAGI at or below $109,000 pays the standard Part B premium of $202.90 a month. Cross that line by a single dollar and the premium jumps to $284.10. Cross $137,000 and it climbs to $405.80. Cross $500,000 and it hits $689.90. Joint filers see the same cliffs at $218,000, $274,000, and $750,000.
The cliff in this example matters. Being $100 over a threshold costs the same as being $10,000 over: IRMAA jumps in full-step increments at each line. A retiree who empties a $600,000 inherited IRA in one year could sit in the top bracket, adding $487 a month per person to Part B and $91 more to Part D. For a couple, that is more than $13,000 in extra Medicare cost for the year. Because IRMAA looks back two years, the pain lands in 2028, long after the 2026 tax return has been filed and forgotten.
Spread the same $600,000 across 10 years and MAGI rises by roughly $60,000 annually. For most retirees drawing Social Security and modest other income, that stays under the first IRMAA threshold and inside the 22% federal bracket, which tops out at $50,400 for singles and $100,800 for joint filers in 2026.
How This Rides Along With Social Security
Large inherited IRA withdrawals also change how Social Security itself gets taxed. Once combined income crosses $34,000 for singles or $44,000 for joint filers, up to 85% of benefits become taxable. A lump-sum withdrawal almost guarantees hitting that ceiling, meaning the retiree pays ordinary income tax on benefits they already earned decades ago.
The 2026 Social Security cost of living adjustment (COLA) is 2.8%, which nudges benefits higher and slightly widens room inside tax brackets. It does not lift IRMAA thresholds enough to offset a large distribution. For anyone already taking required minimum distributions (RMDs) from their own accounts, the inherited IRA stacks on top. That is why year by year modeling matters more than a rule of thumb. A gap year between retirement and claiming Social Security at 70 is often the best window to take a larger slice.
What to Actually Do Before Year 10
Two variables are worth pinning down before touching the account:
- Map each year of the 10-year window against expected Social Security, pension income, and RMDs. Find the years with the most room under the next IRMAA threshold and the next tax bracket. Those are the years to withdraw more, not less.
- Respect the two-year lookback. A distribution taken in 2026 shows up on the 2028 Medicare bill. If a large withdrawal is unavoidable, know the surcharge is coming and set aside cash for it rather than getting blindsided.
The hardest mistake to undo is waiting until year 10 and being forced to take the entire balance at once. Once that distribution hits, the tax bill is locked in and the IRMAA surcharge is on autopilot. Every family’s numbers are different, and a short session with a tax professional who understands beneficiary rules and Medicare surcharges usually pays for itself many times over.
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