Overview
- Recent coverage converges on a clear tactic: retirees who are pre‑RMD should run targeted Roth conversions before the Medicare two‑year lookback window begins to prevent converted income from raising IRMAA surcharges.
- Medicare sets Income‑Related Monthly Adjustment Amounts using tax returns from two years earlier, so conversions done at age 63 or later commonly raise Part B and Part D premiums when enrollees reach 65.
- Concrete examples show the scale of the risk: a $200,000 conversion at 63 that lifts MAGI to about $250,000 can add roughly $3,895 a year in Part B surcharges for an individual and twice that for a couple.
- SECURE 2.0’s delay of required minimum distributions to age 73 creates a multi‑year window for annual partial conversions sized to fill low tax brackets, which lowers future RMDs and shrinks heirs’ taxable inheritances under the 10‑year rule.
- Advisers say retirees should model tradeoffs with fiduciaries because conversions lock in present ordinary‑income tax, can trigger IRMAA or affect Social Security taxation, and can be coordinated with QCDs, brokerage draws, and Social Security timing to optimize outcomes.