Guides › Retirement Withdrawals
Updated July 30, 2026. Quick answer (2026): IRMAA is a cliff. One dollar over a threshold raises Medicare Part B and D premiums for an entire year, so the marginal cost of the last dollar of a withdrawal can be many times its bracket rate.
IRMAA planning runs two years ahead of the premium.
By the time you see the surcharge, the year that caused it is closed.
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A cliff, not a slope
Income tax brackets are marginal: cross one and only the dollars above it are taxed higher. IRMAA does not work that way. Cross a threshold by a single dollar and the Medicare Part B and Part D surcharge applies to the entire year.
Which makes the last dollar absurdly expensive
The marginal cost of the dollar that crosses an IRMAA threshold is not your tax bracket. It is your tax bracket plus the whole annual surcharge, for both spouses if both are on Medicare. Measured as a rate on that one dollar, it is effectively enormous — and entirely avoidable by withdrawing slightly less.
It looks back two years
IRMAA is set from the modified adjusted gross income on the return filed two years earlier. So the withdrawal that triggers a surcharge does so long after you have forgotten making it, and the year you feel it is not the year you can fix it. Planning has to run two years ahead of the premium.
What to do about it in a withdrawal plan
Identify the next threshold above your expected income, and treat it as a ceiling rather than a guideline. If a spending need would cross it, the last slice is usually better sourced from a taxable account — where only the gain counts toward income — or from Roth, which is the one case where breaking the Roth-last rule is defensible. Related: Roth conversions and IRMAA.
Related
Methodology
- This is a single-year, deterministic comparison of the marginal tax cost of one more dollar from each account type. It does not project returns, future brackets, or a lifetime drawdown path, because those depend on assumptions no calculator can verify.
- Every rate is a USER INPUT. Ordinary brackets, long-term capital gain brackets and IRMAA tiers are all indexed annually, so none of them is hardcoded anywhere in this cluster.
- A required minimum distribution is taken first because it is mandatory, not because it is cheapest. Roth is placed last regardless of the single-year arithmetic, which would otherwise drain it first.
- Figures were computed by two independently written engines that agree to the cent, with invariants asserting RMD-first ordering, Roth-last ordering, and that a shortfall is reported rather than silently satisfied.
- Federal only, and excludes state tax, the taxation of Social Security benefits, and ACA premium credits.
Educational estimate, not tax advice. Confirm anything that changes a filing or distribution decision with a CPA.
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