IRMAA planning strategies matter because Medicare isn’t “one price” for everyone. Many retirees discover that their Part B and Part D premiums can rise sharply after a high-income year—even if that income was a one-time event like a Roth conversion, a large IRA distribution, selling property, taking capital gains, or doing a rollover that created taxable income. Those higher premiums are called IRMAA (Income-Related Monthly Adjustment Amount), and they can feel like a penalty you didn’t see coming.

The good news is that IRMAA is often manageable with smart planning. You don’t “avoid Medicare,” and you don’t need complicated tricks. Most of the time, you simply need to understand how Medicare looks back at income (two years), know which income sources count, and coordinate major taxable events with a tax-aware retirement-income plan. That’s especially important for households with pensions, required minimum distributions (RMDs), business income, large brokerage accounts, or a goal to convert pretax money to Roth over time.

At Diversified Insurance Brokers, our advisors help clients nationwide coordinate Medicare and income planning so premiums don’t spike unnecessarily. We focus on practical steps: smoothing taxable income, controlling “one-time” spikes, and aligning distributions with a longer-term retirement income strategy—so you can protect your net cash flow without sacrificing your big-picture goals.

IRMAA basics: what it is and why it exists

IRMAA is an additional premium amount added to Medicare Part B and Medicare Part D when a person’s income exceeds certain levels. The purpose is to have higher-income households pay more for Medicare coverage. Importantly, IRMAA does not mean you’re receiving “better Medicare.” It is simply a surcharge layered on top of your standard premiums.

IRMAA is often discussed like a tax, but it behaves more like a premium adjustment that is triggered by income thresholds. If your income is just barely above a threshold, you could pay the higher amount for the entire year. That “cliff” effect is why planning matters. In many households, a small change in taxable income can prevent a larger jump in Medicare premiums.

From a retirement planning perspective, IRMAA is not only a Medicare topic. It’s an income sequencing topic. It’s about how IRA withdrawals, Roth conversions, capital gains, and other income sources are timed, and how those decisions affect net cash flow a couple of years later.

The two-year lookback: why premiums rise “late”

The most confusing part of IRMAA is the timing. Medicare generally uses your tax return from two years prior to determine whether you owe IRMAA. That means your Medicare premium in a given year can be based on income from a time when your financial situation looked very different.

This is why people are shocked by an IRMAA notice. A retiree might sell a highly appreciated asset, do a large Roth conversion, take a big distribution to buy a second home, or realize a large capital gain. The “pain” may not show up until two years later, when Medicare premiums increase even though the taxable event is long gone.

Effective IRMAA planning strategies treat the lookback rule as a planning tool. Once you know that income “echoes forward,” you can choose when to realize taxable income, how to spread it, and how to match it to years where it has the least impact on your overall retirement plan.

What income counts toward IRMAA (MAGI in plain English)

IRMAA is based on Modified Adjusted Gross Income (MAGI). For most retirees, the simplest way to think about MAGI is: “the income number that gets big when taxable events stack together.” It usually includes wages, pensions, IRA withdrawals, interest, dividends, capital gains, and other taxable income. It can also include some items people don’t expect, depending on their specific tax situation.

The most common IRMAA triggers are not “normal retirement income.” They are spikes: large IRA distributions, large Roth conversions, unusually high capital gains, one-time business income, or a year where multiple income sources pile up at once. Even if your lifestyle didn’t change, your MAGI can change drastically because of how income is recognized for tax purposes.

The key planning idea is not to fear income. It’s to control timing and control stacking. If you keep big income events from occurring in the same year, you often reduce the chance of crossing an IRMAA threshold.

Why IRMAA surprises retirees

Many retirees assume Medicare premiums are fixed, like a utility bill. But Medicare premiums can change based on income, and retirement income is rarely as “steady” as people expect. Even in a well-managed retirement, income is often lumpy: RMDs start, one spouse retires while the other continues working, a pension begins, or a taxable portfolio distribution spikes after a good market year.

IRMAA also surprises people because the decision that caused it might have felt reasonable at the time. For example, a Roth conversion can be a smart long-term tax strategy. Selling an asset might be necessary. Taking a distribution to pay off a mortgage might be emotionally satisfying. The IRMAA issue is that these moves can create a “premium aftershock” later.

That’s why the best IRMAA planning strategies don’t start with Medicare. They start with a retirement-income framework that intentionally coordinates withdrawals, conversions, and taxable events over multiple years.

IRMAA planning strategies that actually move the needle

Good IRMAA planning strategies are not one-size-fits-all. What works for a couple with large IRAs and minimal brokerage assets may not work for a household living primarily on pension income and taxable dividends. The goal is to identify what “moves” your MAGI the most, then build a plan that smooths those spikes across years while still funding your lifestyle.

1) Smooth large IRA withdrawals instead of stacking them

One of the simplest IRMAA planning strategies is to avoid large, one-time IRA distributions in a single tax year whenever possible. When a large withdrawal is stacked with other income—like pensions, Social Security, or capital gains—it can push MAGI into a higher IRMAA bracket quickly. In many cases, spreading the withdrawal across multiple years accomplishes the same goal while reducing the chance of a premium spike later.

This is especially relevant if you are funding a large purchase, doing a home renovation, or paying off debt. If the cash need is flexible, a planned sequence of smaller distributions can protect Medicare premiums and keep your tax brackets more stable.

2) Use Roth conversions with a bracket-and-IRMAA-aware target

Roth conversions can reduce future RMD pressure and create more flexibility later in retirement. But they can also be a major IRMAA trigger when done aggressively. A strong approach is to convert with an annual target that is aware of both tax brackets and IRMAA thresholds. That way, you can still make progress on Roth planning without accidentally creating premium surcharges that outweigh the benefit of the conversion strategy.

Some retirees choose to accept IRMAA for a year or two as part of a larger plan. Others choose to “fill up” a lower bracket and stop short of the next IRMAA threshold. The right decision depends on your future RMD projections, your estate goals, and how sensitive your cash flow is to higher Medicare premiums.

3) Coordinate capital gains with your Medicare timeline

Capital gains can be an IRMAA trap because they often occur in a year when you already have other changes happening—retirement, Social Security, Medicare enrollment, or portfolio repositioning. A common strategy is to spread gains over multiple years rather than selling everything in one year, especially when your gains are discretionary rather than required.

If you’re repositioning a taxable portfolio for retirement income, timing matters. A gain taken now may cost you later in Medicare premiums. A planned approach can reduce the chance you “pay twice” via taxes and higher Medicare costs.

4) Use Qualified Charitable Distributions in the right situations

If charitable giving is part of your plan and you have IRA assets, Qualified Charitable Distributions (QCDs) can be a powerful tool in the right circumstances. The main reason retirees use them is to reduce taxable income that might otherwise push MAGI higher. QCDs can also be part of an RMD strategy once RMDs begin.

This strategy is most effective when it is integrated into the full income plan rather than done as a last-minute move. For deeper planning context, you may find this helpful:
Qualified Charitable Distributions guide.

5) Watch “stacking years” around retirement and Medicare start

Many IRMAA cases come from “stacking years,” where multiple changes hit at once: the final high-earning working year, a severance package, a pension start, Social Security start, and a portfolio change. Even if each event is reasonable, stacking them can create a MAGI surge.

A practical IRMAA planning strategy is to choose one or two major income moves per year rather than doing everything at once. Sometimes this is as simple as delaying a conversion, spreading gains, or coordinating the start month of another income source.

6) Build predictable retirement income that reduces forced taxable decisions

IRMAA risk increases when retirees are forced to pull large amounts in taxable ways because the income plan lacks structure. When you have a predictable “income floor,” you often avoid reactive decisions that cause taxable spikes. That’s one reason many retirees explore guaranteed income planning—so basic expenses can be covered without constantly selling assets or creating large distributions in a single year.

If you are exploring that type of stability, you can review:
lifetime income planning.

7) Compare annuity rates when creating an income floor

When retirees use annuities as part of an income plan, the goal is often not “maximum return.” It’s predictable income and stability. When you are comparing options, it helps to see what’s competitive today. Many households begin by reviewing:
current fixed annuity rates
and
current bonus annuity rates.

The point is not that annuities “solve IRMAA.” The point is that a well-structured retirement income plan can reduce reactive taxable decisions, and that can indirectly reduce IRMAA risk over time.

A practical 3-year IRMAA planning timeline

Because Medicare uses a two-year lookback, your best window for controlling IRMAA is often the year you’re in right now and the next year. A simple way to plan is to think in three layers: the year you are filing taxes for, the year Medicare is looking at next, and the year after that.

In practical terms, this means you can look ahead and ask, “If we do this conversion or sale this year, what will it do to Medicare premiums later?” Then you can choose whether to proceed, scale it down, or spread it out. This approach is especially important when you are near IRMAA thresholds or when you are coordinating multiple income sources.

Most households don’t need a 20-year plan to reduce IRMAA. They need a clean 1–3 year plan that anticipates large taxable events and makes intentional choices about how those events will be recognized on the tax return.

Appealing IRMAA after a life-changing event

Not every IRMAA notice is “your fault,” and not every surcharge is final. If your income dropped due to a qualifying life-changing event—such as retirement, loss of work, reduction of hours, marriage, divorce, or the death of a spouse—you may be able to request an adjustment. The goal is to show that your current income is materially lower than the return Medicare used for the lookback.

The key is documentation and clarity. Many appeals fail because the paperwork is incomplete, the explanation is vague, or the change is not clearly tied to a qualifying event. If your income truly changed, it can be worthwhile to pursue an adjustment rather than simply absorbing the higher premium for the year.

Even if you appeal successfully, it’s still valuable to do forward-looking planning so you don’t repeat the same pattern with another taxable spike later.

Tradeoffs: when paying IRMAA may be worth it

A smart retirement plan is not always about “zero IRMAA.” Sometimes paying higher premiums for a limited time is reasonable if it supports a larger objective—like reducing future RMDs, simplifying estate planning, or repositioning assets to create better long-term stability.

For example, a Roth conversion strategy might increase Medicare premiums temporarily, but reduce lifetime taxes and improve long-term flexibility. The question is not “Can we avoid IRMAA?” The better question is, “What is the total net cost and net benefit over time?” That’s the lens we use when we model strategies.

In many cases, the best plan is a balanced one: convert or realize gains gradually, keep premiums manageable, and still make consistent progress toward the long-term goal.

Common IRMAA mistakes to avoid

The most common IRMAA mistakes are not complex. They are usually about timing. Retirees do a big taxable event late in the year without realizing it will affect Medicare later. Or they do multiple moves in the same year—conversions, asset sales, distributions—because it feels efficient, and then the tax return looks much larger than expected.

Another common mistake is planning only “this year,” without looking at what happens when RMDs begin, when a pension starts, or when a spouse’s income changes. IRMAA planning strategies work best when they are part of a broader retirement-income plan rather than a last-minute scramble after an IRMAA notice arrives.

Finally, many retirees underestimate how quickly thresholds can be crossed when income sources stack. That’s why we emphasize a simple discipline: identify your biggest potential income spikes and decide in advance how you want to handle them.

How Diversified Insurance Brokers helps with IRMAA planning strategies

We approach IRMAA as a practical planning topic. The first step is identifying what’s actually driving your MAGI and whether the trigger is recurring or one-time. The second step is building a short timeline that coordinates distributions, conversions, and taxable events with Medicare lookback rules. The third step is aligning your retirement income plan so you’re not forced into large taxable decisions later.

If your plan includes building predictable income, we can help you compare income-focused strategies, including annuity-based income options where appropriate. If your plan includes reducing RMD pressure, we can help you evaluate Roth conversion pacing in a way that considers both tax brackets and Medicare premiums. If your plan includes large taxable events, we can help you decide whether to spread them out or accept a temporary premium increase as part of a bigger strategy.