Medicare IRMAA planning at Creative Planning means timing your retirement income so the tax returns Medicare reviews keep your Part B and Part D premiums as low as your spending plan realistically allows. Medicare looks back to the return filed for the year two years before the premium year. A one-time withdrawal at age 63 or 64 that pushes joint MAGI just past $218,000 adds $81.20 per month to the Part B premium. That costs $974.40 per year for each enrolled spouse, before any Part D surcharge.
Most retirees discover this problem late in the year, when an annual notice arrives from the Social Security Administration. The letter shows your new monthly Part B premium, calculated from the Form 1040 for the tax year two years back. Some couples cleared a mortgage balance or renovated a kitchen with a lump-sum distribution right around retirement. For them, a premium that suddenly lands in a higher bracket can be an unpleasant shock.
Age 63 is the first year Medicare reads
Medicare premiums for any given calendar year are set using the modified adjusted gross income reported on your federal tax return from two years prior. A retiree who signs up for Medicare at age 65 has their initial premium determined by the tax year they turned 63. Income earned at age 62 or earlier is never reviewed by Medicare.
For IRMAA purposes, the Social Security Administration calculates modified adjusted gross income by combining adjusted gross income with tax-exempt interest. Taxable distributions from traditional 401(k) accounts and IRAs, realized capital gains from taxable accounts, employment wages and the taxable portion of Social Security benefits all count toward this sum. Qualified withdrawals from a Roth IRA do not.
Each income threshold functions as an absolute cliff. Exceeding $218,000 for married couples filing jointly or $109,000 for single filers by a single dollar moves the standard Part B premium from $202.90 to $284.10 per month, alongside a mandatory Part D surcharge. In Medicare IRMAA planning, the objective is deciding which specific tax years should absorb larger, movable distributions.
Consider Arturo and Ivy (hypothetical), ages 62 and 60, who file jointly and plan a one-time $150,000 401(k) withdrawal to prepay their youngest child's final college tuition and replace a roof. Taking the distribution immediately, while Arturo is 62, pairs Ivy's $40,000 salary with $10,000 in brokerage capital gains and the $150,000 distribution for a total MAGI of $200,000. Because that return determines premiums for Arturo's age-64 year when he is not yet enrolled in Medicare, no surcharge applies.
Arturo might delay that withdrawal to age 63 or 64 simply because Medicare has not started yet. Doing so drops the money directly into the two-year lookback period. Suppose he waits until age 64. Ivy still earns $40,000, they take a scheduled $30,000 portfolio withdrawal, and the $150,000 distribution pushes MAGI to $220,000, over the $218,000 threshold. That return sets his age-66 premiums. Arturo pays $284.10 instead of $202.90 per month, an extra $81.20 per month or $974.40 over the year in Part B alone. Now suppose they postpone five years, to Arturo's age 67, when Ivy is 65. They add $34,000 of taxable Social Security benefits and a $50,000 draw, pushing MAGI to $234,000. Both spouses are enrolled by the premium year that return sets, so together they pay $1,948.80 in Part B surcharges.
Look at the row for Arturo's age 64 in the table. The same $150,000 that cost nothing at 62 crosses the joint line by $2,000 and adds $974.40 to Arturo's Part B bill.
| Arturo's age (Ivy's) | What happens | What to do |
|---|---|---|
| 62 (60) | Income sets age-64 premiums, no Medicare | Take movable one-time income now |
| 63 (61) | Income sets Arturo's first Medicare year | Keep joint MAGI under $218,000 |
| 64 (62) | Lump here: MAGI $220,000 | Avoid; costs Arturo $974.40 |
| 65 (63) | Arturo enrolls in Medicare | Check the premium letter's tax year |
| 67 (65) | Ivy enrolls; his Social Security starts | Lump here costs both: $1,948.80 |
Will a guardrail raise or a later Social Security start change my Medicare IRMAA planning?
A guardrail raise after strong market gains typically increases annual distributions from pre-tax accounts, adding taxable income directly to the modified adjusted gross income figure Medicare evaluates. If an upward adjustment would push joint income past the $218,000 tier line, Creative Planning sources that supplementary cash from savings or a taxable brokerage account with minimal embedded capital gains instead of an IRA.
In the first years of retirement, Creative Planning often pulls cash from a non-retirement brokerage account to keep MAGI low. Only the realized gain on each sale shows up as taxable income. Selling $20,000 of shares bought for $16,000 adds $4,000 to MAGI, not $20,000.
Delaying Social Security retirement benefits until age 67 or age 70 keeps your MAGI lower throughout early retirement, widening the room available under Medicare tier thresholds. Once claimed, larger monthly benefits mean up to 85% of that payment becomes taxable income during the exact years both spouses are enrolled in Medicare.
Creative Planning integrates this strategy alongside related work in Retirement income planning, coordinates distribution rules through a dedicated Guardrails withdrawal strategy, and times benefit elections within broader Social Security claiming reviews. No investment is guaranteed, and a portfolio can fall in value, sometimes for years.
Should we redo the IRMAA numbers every year?
Redo the IRMAA calculations every autumn, before the December 31 cutoff. Whatever income lands on this year's return sets your premiums two years from now. Year-end planning is your last chance to harvest capital losses, trim taxable withdrawals or push an asset sale into January before a tier line is crossed.
Certain life milestones require an immediate, off-cycle assessment. The death of a spouse means the surviving partner will soon file as a single taxpayer, dropping the entry-level surcharge boundary from $218,000 down to $109,000. Selling a primary residence with capital gains exceeding the home sale exclusion, inheriting a traditional IRA subject to mandatory distributions, or receiving unexpectedly large mutual fund capital gain distributions in December also require immediate reviews.
Stopping work entirely or cutting your hours counts as a work-stoppage or work-reduction event under Social Security Administration rules. Form SSA-44 applies only once you are being charged IRMAA. You can file it as soon as you receive a surcharge determination, using your final work date and revised earnings estimate as proof that your income has dropped.
When the Internal Revenue Service has not yet provided the lookback return to Social Security, the agency defaults to your tax data from three years prior until records update. Reviewing your initial determination notice against the correct tax year helps verify that you are not paying an unnecessary premium penalty.
Four documents Creative Planning clients get before each December 31 cutoff
Clients at Creative Planning receive clear, actionable documentation before the year ends so no tier threshold is crossed by accident. Each document connects day-to-day portfolio distributions to upcoming Medicare costs.
- A multi-year MAGI projection mapping income estimates across both spouses' ages, marking the $218,000 and $274,000 joint filing boundaries alongside the precise calendar years Medicare reviews.
- A fall income audit showing current-year estimated MAGI alongside the exact remaining dollar buffer under the next surcharge threshold, delivered with enough time to adjust distributions before the December 31 cutoff.
- A personalized withdrawal calendar outlining monthly account sources and any scheduled lump-sum asset sales, updated within your written plan whenever guardrail rules signal a change in spending.
- An income verification summary preparing the required baseline and estimated numbers so you can file Form SSA-44 with supporting employer documentation after a qualifying life-changing event.
Do I have to handle the Social Security premium paperwork myself?
You sign and mail Form SSA-44 and reply to official Social Security notices, because administrative agencies only accept appeals submitted directly by the beneficiary. You also alert Creative Planning whenever unexpected income appears, such as a corporate severance payment, a buyout distribution, or an inheritance.
Creative Planning models multi-year MAGI boundaries, structures account distributions around surcharge thresholds, and compiles the concrete financial numbers required for your SSA-44 appeal filing.
Your CPA prepares the annual Form 1040, reviews the adjusted gross income and tax-exempt interest figures Medicare audits, and flags year-end capital gain distributions from mutual funds. An estate attorney structures wills, trusts, and beneficiary designations, which dictate whether a surviving spouse inherits a large pre-tax retirement balance. Meanwhile, the custodian executes portfolio liquidations on the scheduled dates and generates the Form 1099-R forms that reflect those transactions.
Three calendar years before 65 the window opens
Medicare IRMAA planning becomes relevant the calendar year an individual turns age 62, three years prior to standard Medicare enrollment at age 65. If either spouse is within that window, or already enrolled in Medicare, any movable distribution warrants an advance review.
You also need this review if projected joint MAGI sits within roughly $10,000 of any tier threshold, or if health changes suggest a move to single tax filing is possible. However, if your predictable household income sits securely beneath $218,000 as a couple or $109,000 as a single filer, an extensive restructuring is unnecessary; a simple fall check confirms you remain clear.
Accelerating distributions into the years prior to age 65 can backfire if doing so pushes you into a higher federal income tax bracket or reduces Affordable Care Act health insurance subsidies. Sparing yourself an annual $974.40 Part B surcharge is poor math if taking the income early triggers $3,000 in additional taxes, which is why Creative Planning analyzes both sides of the trade-off first.
To evaluate your numbers, schedule a first conversation with Creative Planning through our website request form, having your most recent Form 1040 and any Social Security notices ready. The firm serves clients across all 50 states via phone and video calls, with an office located at 539 11th Avenue South, Naples, FL 34102. The client minimum is $500,000 in investable assets, and advisory fees are set out in a written agreement before any work starts.
What people ask about Medicare IRMAA planning
How soon before I turn 65 does my income start counting toward my Medicare premiums?
Medicare reviews income from two calendar years prior to enrollment. If you plan to enroll in Medicare at age 65, the calendar year you turn age 63 is the first year your tax return determines Part B and Part D premiums. Income realized during the calendar year you turn age 62 or earlier is never reviewed by Medicare.
Social Security sent me a letter raising my Part B premium after I retired. What can I do about it?
You can request an income reduction using Form SSA-44 if your income dropped due to a qualifying life-changing event like retirement or reduced work hours. Submit the form along with proof of your work reduction and an estimate of your current year income to your local Social Security office to reset your premium to your new lower earnings.
Is a one-time 401(k) withdrawal cheaper at age 62, or spread across the years I'm on Medicare?
Taking a lump withdrawal at age 62 is typically cheaper for Medicare premiums because that tax return is never read by Medicare. Spreading that same distribution across Medicare years can push modified adjusted gross income past the $218,000 joint threshold, triggering recurring Part B and Part D monthly surcharges for both spouses.
Does selling stocks in my brokerage account count toward the income Medicare uses?
Yes, net realized capital gains reported on your federal income tax return are included in adjusted gross income, which directly raises modified adjusted gross income for IRMAA calculations. However, only the realized gain portion is counted as income, while the return of your original principal investment does not count toward Medicare surcharge thresholds.
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This material is for general information. It is not individualized investment, tax or legal guidance. Investing involves risk, including the possible loss of principal. Before making any financial decision, talk with a qualified professional about your specific circumstances.