Ask Bob: Will a Roth Conversion Increase My Medicare Premium?

A reader is wondering how a Roth conversion two years ago may impact their Medicare premiums.

Author:
Retirement Daily
Publish date:
Feb 4, 2021

Question

Do I have to pay IRMAA (income-related monthly adjustment amount) based on my income before becoming Medicare eligible? I started in March 2020. They exempted IRMAA for 2020 since I did not work in 2019. But we did Roth conversion resulting in high income in 2019. Do I have to pay IRMAA for that in 2021?

Answer

“A Roth conversion can be a great strategy but it looks like you triggered a higher Medicare Part B premium because of the additional income attributed to the conversion,” says Bob Rall, CFP®, with Rall Capital Management.

“Your Medicare premium is based upon the modified adjusted gross income as reported on your tax return from two years ago,” he adds. “Moving forward,” Rall suggests, “you may try to estimate the amount of a Roth conversion you could do without pushing you above the income limits for the lower premium.”