Utz Is Going Private for Cash. A Retiree Holding the Stock Could Face a Medicare Bill From a Sale He Never Chose.

Picture a retiree who bought LXP Industrial Trust (NYSE: LXP) years ago for the dividend, sat through two market crashes, and had no intention of selling. Then in July, LXP agreed to a $5.2 billion all-cash merger with affiliates of Brookfield Asset Management (NYSE: BAM) | BAM Price Prediction and Canada Pension Plan Investment Board (CPPIB). The buyers will pay $61.20 per share, with the deal expected to close by the end of 2026. Anyone holding the stock in a taxable account when the transaction closes receives cash, whether they wanted to sell or not. LXP shareholders are not alone.

Last month, Utz Brands (NYSE: UTZ), the snack maker behind Zapp’s and Boulder Canyon, agreed to be taken private by Germany’s Intersnack Group in a $2.9 billion transaction. Public shareholders will receive $14.25 per share if the deal closes as expected in the fourth quarter. The names are different. The retirement mechanic is the same. An all-cash acquisition creates a sale in a tax year the shareholder did not choose, potentially reshaping the taxation of Social Security and the cost of Medicare.

Details That Move the Needle

One useful clarification up front: capital gains do not count toward Social Security’s retirement earnings test. That test counts wages and net self-employment income. A retiree claiming before full retirement age does not lose benefits because a buyout converted stock into cash.

The gain can still affect the household in two other ways.

First, it raises provisional income, the figure used to determine how much of a Social Security benefit becomes taxable. For single filers, up to 50% of benefits may be taxable once provisional income exceeds $25,000, and up to 85% above $34,000. For joint filers, the corresponding thresholds are $32,000 and $44,000. Those figures have not been indexed for inflation. A substantial capital gain can therefore push as much as 85% of the benefit into taxable income for the year. That does not mean Social Security is taxed at an 85% rate. It means up to 85% of the benefit is included in taxable income.

Second, the gain raises modified adjusted gross income (MAGI) used for Medicare’s Income-Related Monthly Adjustment Amount, or IRMAA. Medicare generally looks back two years, so a transaction closing in 2026 would ordinarily affect 2028 Part B and Part D premiums. IRMAA uses brackets, meaning a relatively small amount of additional income can trigger the full surcharge associated with the next tier.

Where the Retirement Picture Bends

Assume the LXP shareholder owns 2,000 shares with an adjusted basis of approximately $20 each. At $61.20, the transaction produces an illustrative long-term gain of $82,400.

Stack that gain on top of Social Security, a pension, and required minimum distributions (RMDs), and it could place more of the benefit in the taxable column. It may also cross an IRMAA threshold and, for sufficiently high-income households, trigger the 3.8% Net Investment Income Tax.

The income he bought the stock to produce is disappearing, too. LXP suspended its $0.70 quarterly common dividend under the merger agreement. The dividend stops before the capital-gains tax and any Medicare surcharge arrive.

What to Do Before Year-End

Two moves carry most of the weight:

1. Manage the remaining income levers. Consider postponing a discretionary Roth conversion or optional IRA withdrawal, and review the taxable portfolio for losses that could offset part of the gain. The merger cannot be undone after closing, but the household’s total 2026 income may still be manageable before December 31.
2. Budget for a possible 2028 Medicare increase. The applicable thresholds have not been released, so use the latest IRMAA table as a planning guide and leave room below the next bracket. Do not assume Form SSA-44 will erase the gain. A stock acquisition is not itself a qualifying life-changing event, although a separate retirement or work stoppage may support an appeal under the applicable rules.

Shares held inside an IRA do not create an immediate capital gain when converted to cash. In a taxable account, however, the shareholder’s adjusted basis and the closing date determine the result. The company chose when to sell. The retiree still has a few months to decide what else lands on the same tax return.

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