Retirees converting traditional IRAs to Roth accounts risk higher Medicare premiums due to IRMAA surcharges based on two-year-old income spikes.
Retirees converting large traditional IRA balances to Roth IRAs face unexpected Medicare premium surcharges tied to income spikes. The converted amount counts as ordinary income, pushing modified adjusted gross income (MAGI) above Medicare thresholds and triggering the Income-Related Monthly Adjustment Amount (IRMAA).
For 2025, a married couple filing jointly with MAGI above $212,000 faces a Part B premium jump from $185 to $259 per person monthly, plus additional Part D surcharges. IRMAA operates as a cliff—crossing the threshold by even $1 triggers the full surcharge for the entire year, with no phase-in or proration.
The surcharge applies two years after the income spike, often surprising retirees who assume the conversion is a closed decision. The penalty cannot be reversed using Form SSA-44, leaving retirees with higher premiums for the duration.