Roth Conversions and Medicare: The Two-Year Lookback

A Roth conversion is a planned tax bill. You move money from a traditional IRA or 401(k) into a Roth IRA. The amount you move counts as income that year. Most people expect the income tax. Fewer expect the second effect: higher Medicare premiums, often arriving two years later.

This happens because of a rule called IRMAA. It is not a penalty, and it is not hidden. It simply runs on a delay. Once you know the delay is there, you can plan around it.

What is IRMAA?

First, two quick terms. Medicare Part B covers doctor visits and outpatient care. Medicare Part D covers prescription drugs. Most people pay a monthly premium for each.

IRMAA stands for income-related monthly adjustment amount. It is an extra amount added to your Part B and Part D premiums when your income is above a set level. In 2026, the standard Part B premium is $202.90 a month. People with higher income pay more, up to $689.90 a month for Part B alone.

IRMAA is a premium surcharge, not a tax. It is not owed to the IRS. It is collected with your Medicare premium, often taken straight from your Social Security check. According to CMS, roughly 8% of people with Part B pay it.

What income does Medicare look at?

Medicare uses a number called MAGI, short for modified adjusted gross income. For IRMAA, Social Security defines it simply. It is your adjusted gross income (line 11 of Form 1040) plus any tax-exempt interest (line 2a).

That second part surprises some people. Interest from municipal bonds is free of federal income tax. But it still counts toward IRMAA.

Social Security gets this number from the IRS. In most cases it uses the return from two years before the premium year. If that return is not available yet, it may use the one from three years before.

Why does a Roth conversion change my Medicare premium?

The money you convert is added to your income for that year. The IRS says a conversion "results in taxation of any untaxed amounts in the traditional IRA." That added income raises your adjusted gross income, and so your MAGI.

Two years later, Social Security looks at that return. If the conversion pushed your MAGI over a line, your premiums go up for that year. If your income drops back down the next year, your premium usually drops too. The charge follows each year's return. It is not permanent.

For married couples, there is one more layer. If you file jointly and both of you are on Medicare, the joint income sets the tier for both of you. So each spouse pays the higher amount.

What does "cliff" mean for IRMAA?

Income tax brackets are gradual. Only the dollars above a line are taxed at the higher rate. IRMAA does not work that way.

IRMAA tiers are cliffs. If your income goes one dollar past a line, you pay the full charge for that tier. For example, a married couple with joint MAGI of $218,000 pays the standard premium. At $218,001, each spouse pays $81.20 more a month for Part B, plus $14.50 more for Part D.

This is why people who plan conversions often size them to stay just under a line. A small amount of extra income in the wrong year can cost more than it seems.

When does the two-year lookback start to matter?

Most people join Medicare at 65. The premium for the year you turn 65 is generally based on your tax return from two years before, the year you turned 63.

Follow that logic back one step. Income from the years you were 62 or younger is generally never used to set a Medicare premium. By the time Medicare looks, those years have already passed out of the window. This is why some planners talk about a "pre-Medicare window" for conversions. We cover the wider window in our article on the Roth conversion window between retirement and RMDs.

Two cautions apply. First, the rule is "generally." If the two-year-old return is not on file, Social Security can use the return from three years before. Second, conversions at 63 and later do count. A conversion at 63 can affect your first year of Medicare premiums.

In this example, the couple pays $5,769.60 more in premiums for one year. That cost sits on top of the income tax on the conversion. It is a real cost. It may still be smaller than the future tax the conversion is meant to reduce. The point is to put it in the math, not to avoid it at any price.

Can I appeal an IRMAA charge?

Yes, in some cases. Social Security can make a new decision using a more recent year's income. To ask, you need a qualifying "life-changing event" that lowered your income. You can use Form SSA-44 to report it. The form is optional; you can also contact Social Security directly.

Social Security's list of life-changing events is short and exclusive:

• Death of a spouse
• Marriage
• Divorce or annulment
• Work reduction
• Work stoppage, such as retiring
• Loss of income-producing property
• Loss of employer pension
• Receipt of a settlement payment from a current or former employer

Retiring is one reason people file. If you stopped working in the year Medicare is looking at, or after it, your older, higher income may no longer fit your life. An SSA-44 asks Social Security to use your newer, lower income instead.

A Roth conversion is different. Social Security names "conversion of an IRA" as a non-qualifying event. So are capital gains from selling property and cashing in bonds. A one-time spike from a conversion generally cannot be appealed away. This is why the planning happens before the conversion, not after.

What can I ask a tax professional?

If a conversion is on the table, these questions can help shape the conversation:

• Which tax year will Medicare use for my first premium, and for my spouse's?
• How close is my expected MAGI to the next IRMAA line, including tax-exempt interest?
• If I convert this year, what is the total cost: income tax plus any higher premiums two years from now?
• Would a smaller conversion, spread over more years, keep me under a line?
• Do I have other income spikes coming, like a home sale, that could stack with a conversion?
• Have I had a life-changing event, such as retiring, that would justify filing an SSA-44?

Is IRMAA a reason not to convert?

Not on its own. IRMAA is one cost among several. For some households, paying higher premiums for a year or two is worth it. A conversion can lower required withdrawals later, and those withdrawals can cause IRMAA too, year after year. For other households, the numbers point the other way.

What matters is seeing the charge coming. The lookback is fixed and the tables are public. That makes IRMAA one of the more predictable costs in retirement planning.

This article is educational and is not tax advice. Rules and thresholds change each year.

If you are weighing a conversion near Medicare age, a qualified tax professional or an independent advisor can run the numbers for your own household.