IRMAA (Income-Related Monthly Adjustment Amount)
A surcharge added to Medicare Part B and Part D premiums for higher-income retirees, based on income from two years prior.
IRMAA is an extra amount higher-income Medicare beneficiaries pay on top of the standard Part B and Part D premiums. It's tiered: as your modified adjusted gross income (MAGI) crosses each threshold, the surcharge steps up to the next bracket.
Two features make it a planning trap. First, it uses a two-year lookback — your premiums in a given year are set by your MAGI from two years earlier, so a one-time income spike at 63 can raise your Medicare costs at 65. Second, it's a cliff, not a phase-in: crossing a threshold by a single dollar moves you to the next tier and the full higher surcharge.
Because Roth conversions, capital gains, and large withdrawals all raise MAGI, retirees managing conversions in their early 60s have to watch IRMAA thresholds carefully. Spreading income across years can keep you under a cliff that a single large event would cross.
This definition is general information to help you understand a term, not financial, tax, or legal advice. Figures that change year to year (limits, thresholds, rates) should be confirmed against current official sources. For guidance on your situation, a licensed fee-only fiduciary is the right next step.