IRA Withdrawals Can Increase Your Medicare Costs.

If you’ve reached Medicare age, or are almost there, taking large withdrawals from tax-deferred accounts like IRAs and 401(k)s could creep back to haunt you – even years from now. These problems may arise when you make a large IRA withdrawal to purchase a big-ticket item, such as an RV, helping a child with a down payment on a new house, or a kitchen remodel.

When the IRS computes your Medicare premiums, they look back two years, to the tax return, you filed the year before last. So, in 2019, that’s your 2017 return.

If you took a large IRA withdrawal in 2017 to fund a big expense, you may have increased your modified adjusted gross income to the point that the government will now tack an extra charge onto your Medicare Parts B & D premiums. This extra charge is called an Income-Related Monthly Adjustment Amount, or IRMAA.

How Much Can IRMAA Add?

  • A lot – especially when you’re on a fixed income. IRMAA could increase your Medicare Part B premium from its standard monthly premium of $135.50 to anywhere between $189.60 and $460.50 per month.

Escaping IRMAA

  • The only way to truly escape IRMAA is to carefully plan your IRA and 401(k) withdrawals – so you stay within the Medicare income guidelines published by the Centers for Medicare and Medicaid Services. But, if you do find yourself surprised, you can appeal to have the IRMAA surcharge waived if you can show that you have suffered a hardship since 2017, e.g., divorce, the death of a spouse, etc., and that your income is now materially lower.

A Little Planning Now Will Save You Money Later

Saving for retirement, or any big goal involves not just the careful construction of your nest egg, but also careful planning to make sure you make the most of your hard work. It’s important to understand how actions you take now, like withdrawing from your IRA, may impact your savings and expenses in retirement. We understand that retirement planning can seem overwhelming at times, and we’re here to answer your questions about IRMAA, Medicare, IRA withdrawals, or anything else regarding your retirement planning.


This information is provided for general information purposes only and is not intended to provide specific investment advice. The information in the articles should not be relied on for tax reporting, accounting, or valuation purposes. Past performance is not a guarantee of future performance. It is not possible to invest directly in an index.

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