IRMAA-Aware Roth Conversion: Staying Under $103K MAGI at 65

Medicare enrollment at 65 introduces a constraint that does not exist before: the IRMAA two-year lookback. Under SSA §1839, Medicare premiums for any given year are based on your modified adjusted gross income (MAGI) from two tax years prior. Your 2026 tax return determines your 2028 premiums. This creates a planning lag that is easy to forget — especially when executing Roth conversions in the gap years between retirement and Social Security claim age, when income is naturally low and large conversions look attractive.

The IRMAA mechanics are unforgiving. One dollar over the $103,000 MAGI threshold (single filer) or $206,000 (MFJ) triggers approximately $1,050/year in additional Medicare costs for a single retiree, $2,100/year for a couple. There is no proration. There is no phase-in. There is no recharacterization (eliminated by TCJA 2017). A conversion that overshoots the threshold by $1 costs as much as one that overshoots by $25,000. This article walks through the exact math, the conversion-sizing framework that respects IRMAA above the bracket, and the SSA Form SSA-44 appeal process for the narrow cases where the IRMAA surcharge can be reversed.

The 2026 IRMAA tier structure

For 2028 premiums (based on 2026 MAGI), the projected tier table from CMS:

• Tier 0 (no surcharge): MAGI ≤ $103,000 single, ≤ $206,000 MFJ. Part B premium $185/month.
• Tier 1: MAGI $103,001 - $129,000 single, $206,001 - $258,000 MFJ. Part B $259/month (+$74/month surcharge). Part D +$13.70/month. Annual cost: ~$1,050/person.
• Tier 2: MAGI $129,001 - $161,000 single, $258,001 - $322,000 MFJ. Part B $370/month. Part D +$35.30/month. Annual cost: ~$2,640/person.
• Tier 3: MAGI $161,001 - $193,000 single, $322,001 - $386,000 MFJ. Part B $480.90/month. Part D +$57/month. Annual cost: ~$4,230/person.
• Tier 4: MAGI $193,001 - $500,000 single, $386,001 - $750,000 MFJ. Part B $591.90/month. Part D +$78.60/month. Annual cost: ~$5,820/person.
• Tier 5: MAGI > $500,000 single, > $750,000 MFJ. Part B $628.90/month. Part D +$85.80/month. Annual cost: ~$6,180/person.

Each tier is a cliff. Crossing by $1 produces the same 12-month surcharge as crossing by $20,000. The household cost for a married couple where both spouses are on Medicare doubles every figure above.

The MAGI calculation under SSA §1839

IRMAA MAGI is narrower than the MAGI used for ACA premium subsidies. The components:

• Adjusted Gross Income (AGI): Form 1040 line 11. Includes wages, IRA distributions, Roth conversion amounts, capital gains, taxable portion of Social Security, pension income, rental net income, dividends, interest.
• Plus tax-exempt interest: Form 1040 line 2a. Primarily municipal bond interest, which is invisible on AGI but counts for IRMAA.
• Does NOT include: untaxed portion of Social Security, foreign earned income exclusion, Roth IRA qualified distributions, qualified charitable distributions (QCDs).

The exclusion of Roth distributions is the single most important planning feature: a retiree with $50K of Roth withdrawals layered on top of $80K of other income has IRMAA MAGI of $80K, comfortably below the threshold. The same $50K from a traditional IRA produces MAGI of $130K, triggering Tier 1 by a wide margin.

Sizing the conversion under the IRMAA cap

The conversion-sizing framework when IRMAA matters (typically age 63+, once Medicare enrollment is approaching):

1. Project your full-year non-conversion MAGI. Add up all expected income sources for the year, including the taxable portion of Social Security if you have already claimed.
2. Subtract from the target IRMAA threshold. For most retirees that is the Tier 1 threshold: $103,000 (single) or $206,000 (MFJ). The exception is retirees whose non-conversion MAGI already exceeds Tier 1 — then target the top of the current tier rather than the next tier up.
3. Subtract a buffer. $1,000-$2,000 is reasonable. Unexpected mutual fund capital gains distributions in December are the most common cause of accidental tier overshooting; a buffer absorbs them.
4. That is your conversion target. Execute by December 31.

Worked formula: conversion = $103,000 - other_MAGI - $1,000 buffer.

Worked example: William, age 65, $1.2M traditional IRA, single

William is 65, single, retired from a finance role. He has $1.2M in a traditional IRA, $400K in a taxable brokerage account, $100K in a Roth IRA, no pension, no Social Security yet (planning to delay to 70). He just enrolled in Medicare. 2026 income projections:

• Wages: $0 (retired in 2025).
• Taxable brokerage dividends + capital gain distributions: $9,500 expected.
• Tax-exempt municipal bond interest: $3,200.
• Other income: $0.

Projected non-conversion MAGI: $9,500 + $3,200 = $12,700. Headroom below $103,000: $90,300. With $1,000 buffer, William can convert up to $89,300 from traditional to Roth in 2026 without triggering 2028 IRMAA surcharges.

If William executes the $89,300 conversion

2026 MAGI: $102,000. Just below Tier 1 threshold. 2028 Medicare premium: standard $185/month. Federal tax on conversion + dividends: $9,500 dividends (mostly qualified, taxed at 0% LTCG due to total taxable income below $48,350) + $89,300 conversion - $15,750 standard deduction - $1,600 age-65 SD bump = $81,450 taxable. Federal tax: $11,925 × 10% + $36,550 × 12% + $32,975 × 22% = $1,193 + $4,386 + $7,255 = $12,834 federal tax. Plus zero IRMAA.

If William mistakenly converts $100,000

2026 MAGI: $112,700. Tier 1 territory. 2028 Medicare premium: $259/month (Part B). Additional cost: ($259 - $185) × 12 = $888/year. Plus Part D surcharge ~$164/year. Total 2028 IRMAA cost: ~$1,052. Federal tax on the extra $10,700 of conversion: $10,700 × 22% = $2,354. Plus IRMAA $1,052. Total marginal cost of the last $10,700 of conversion: $3,406, an effective rate of 31.8%.

That 31.8% effective rate is well above the 22% nominal bracket and roughly matches a 24% bracket conversion — the IRMAA surcharge effectively pushed William into a higher real cost than the next federal bracket. This is why IRMAA, not bracket, is the binding constraint for most $1M+ holders.

The 10-year conversion plan

William executes $89,300 conversions in 2026 and 2027. Then he claims SS at 67 in 2028. Once SS arrives, his non-conversion MAGI jumps:

• SS at age 67: $40,000/year. Taxable at 85% inclusion (IRC §86) = $34,000.
• Taxable brokerage: $9,500.
• Muni interest: $3,200.
• Total non-conversion MAGI from 2028 onward: $46,700.

Conversion headroom drops: $103,000 - $46,700 - $1,000 = $55,300/year. William continues converting at the lower rate from 2028 to 2031 (ages 67-70). Total converted over 6 years: 2 × $89,300 + 4 × $55,300 = $400,000.

At age 73 RMDs begin. Traditional balance has gone from $1.2M to roughly $1.0M (started $1.2M, converted $400K, grew at 6% on shrinking balance). First-year RMD: $1.0M / 26.5 = $37,736. Combined with SS and dividends, MAGI in his 70s lands around $90K — still below IRMAA Tier 1. The conversion plan worked.

The MFJ adjustment

For a married couple both age 65+ enrolled in Medicare, the threshold is $206,000 MAGI but the surcharge applies to each spouse individually. The household cost at Tier 1 is approximately $2,100/year ($1,050 per spouse), at Tier 2 ~$5,280, at Tier 3 ~$8,460.

Worked example: Robert and Lisa, both 65, $1.6M combined traditional IRA, $40K combined SS already claimed at FRA, $15K rental net, $4K muni interest, $8K dividends. Non-conversion MAGI: $40K × 0.85 + $15K + $4K + $8K = $61,000. Conversion headroom below $206,000: $144,000 (with $1K buffer). They can convert up to $144,000/year as a household without triggering household IRMAA on either spouse.

The position: at 65+, IRMAA is the binding constraint, not the bracket

Standard tax-planning content treats Roth conversion sizing as a bracket problem: fill the 12%, the 22%, and decide whether to push into 24%. That framing was correct before Medicare enrollment. After 65, IRMAA almost always binds before the bracket top is reached. Here is why:

• The IRMAA Tier 1 threshold ($103,000 single, $206,000 MFJ) is roughly equal to the top of the 22% bracket.
• Crossing IRMAA costs $1,050 (single) or $2,100 (MFJ) in additional Medicare. Crossing the 22%-to-24% bracket costs only the 2% rate differential on the marginal conversion dollar.
• A single retiree converting from $103,000 to $113,000 saves $200 in federal tax (2% × $10,000) but loses $1,050 in IRMAA — net cost $850. The conversion makes you poorer.
• The bracket calculation says "convert more if your future bracket is higher." The IRMAA calculation adds "convert no more than the IRMAA threshold unless future bracket arbitrage exceeds the IRMAA cost." For most retirees the bracket arbitrage is 2-8 percentage points (~$200-$800 per $10K of conversion), well below the IRMAA cost.

The rule at 65+: convert up to the IRMAA threshold, then stop, unless your projected future marginal rate is 24%+ AND the IRMAA cost is dwarfed by the long-term arbitrage. For most $500K-$1.5M holders, stop at IRMAA.

The Form SSA-44 appeal: the narrow escape hatch

If a one-time income event combined with a qualifying life-changing event pushed you over an IRMAA threshold, file Form SSA-44 with the Social Security Administration. The eight qualifying events under SSA §1839(i):

1. Marriage
2. Divorce or annulment
3. Death of a spouse
4. Work stoppage (retirement)
5. Work reduction
6. Loss of income-producing property
7. Loss of pension income
8. Employer settlement payment

A voluntary Roth conversion does not qualify standalone. But if you retired in the same calendar year as the conversion, work stoppage qualifies and you can file the appeal. SSA recalculates IRMAA using your reduced post-retirement income estimate. Documentation required: proof of the life-changing event (separation letter, divorce decree, death certificate, etc.) and a projection of revised income.

There is no formal filing deadline, but file promptly after receiving your IRMAA determination notice (typically mailed in October-November for the following year's premiums). If the appeal is approved, IRMAA is removed retroactively and any overpaid premiums are refunded.

The Q4 execution rule

From MoneyMap US Position 3 framing: "Most retirees with $1M+ in pre-tax accounts who retire before SS / RMDs should aggressively Roth-convert in the gap years — typically 60-73." Add the IRMAA-aware addendum: execute in Q4.

By October, you have visibility into roughly 90% of your year's income. December capital-gain distributions from mutual funds are the largest remaining uncertainty — check fund prospectuses for projected year-end distributions. November is the practical sweet spot for executing the conversion, with enough buffer for late-December surprises.

Conversions cannot be made retroactive to the prior tax year (unlike IRA contributions, which have an April 15 deadline). The IRC §408A(d)(6) recharacterization repeal in TCJA 2017 means you cannot undo a conversion. Overshoot the IRMAA threshold by mistake and you eat the surcharge.

What to do next

1. Pull your 2025 tax return to estimate your 2026 non-conversion MAGI. Subtract from $103,000 (single) or $206,000 (MFJ) to find your conversion headroom.
2. Check your 1099-DIV history to estimate Q4 mutual fund distributions. Build in a $1,000-$2,000 buffer.
3. Schedule your conversion for early-to-mid November. Most large brokerages (Fidelity, Schwab, Vanguard) process conversions within 1-3 business days.
4. If you also retired in 2026, file Form SSA-44 immediately after receiving the 2028 IRMAA determination notice (October-November 2027), regardless of conversion size — the work stoppage alone may qualify you for reduced premiums.
5. Repeat annually through age 72 (or until traditional balance is exhausted), adjusting the conversion target as your SS, pension, and other income evolve.

Key takeaways

• Medicare enrollment at 65 introduces the IRMAA two-year lookback under SSA §1839. Your 2026 tax return determines your 2028 Medicare Part B and Part D premiums.
• The first IRMAA tier at $103,000 (single) / $206,000 (MFJ) MAGI in 2026 costs approximately $1,050/year (single) or $2,100/year (couple) in additional Medicare premiums.
• IRMAA MAGI = AGI + tax-exempt interest. It excludes untaxed Social Security and Roth distributions, both of which can be planning levers.
• For most $1M+ holders past 65, IRMAA binds before the 22% bracket top. The rule of thumb: stop the conversion at the IRMAA threshold unless your future marginal rate is 24%+ and the long-term arbitrage dwarfs the surcharge.
• Form SSA-44 lets you appeal IRMAA only if a qualifying life-changing event (retirement, divorce, death of spouse, etc.) occurred — a voluntary conversion alone does not qualify, but combined with work stoppage it often does.
• Execute in Q4 (early-to-mid November) for precision. Recharacterization was eliminated by TCJA 2017 under IRC §408A(d)(6) — overshoots are permanent and so is the IRMAA surcharge.