How an IRA Withdrawal Can Raise Your Medicare Premium Two Years Later

The money you pull out of your IRA this year can raise your Medicare premium two years from now. Most people find out when the bill shows up, and by then it is already done.

The connection nobody explains

Medicare uses your tax return to decide whether you pay more for Part B and Part D. Not this year’s return — generally the one from two years ago.

So the premium you pay in 2028 will generally be based on the income you report for 2026. What you are doing with your money right now can already affect it.

What the surcharge is

Most people pay no monthly premium for Part A, once they or their spouse have enough work history.

Part B is different. In 2026 the standard premium is $202.90 a month. But once your income crosses certain limits, Medicare adds a surcharge called IRMAA — the Income-Related Monthly Adjustment Amount.

For reference, in 2026 that starts above $109,000 for a single filer and $218,000 for a married couple filing jointly. The 2028 limits have not been announced.

Who actually gets caught

I know what you are thinking. Those are big numbers and most people on Medicare never get near them. That is true — only about 8% of people with Part B pay this surcharge.

But here is who gets caught: somebody with an ordinary income who takes one big taxable withdrawal in a single year.

You pull $60,000 out of a traditional IRA to fix the roof and put in a new air conditioner. It is a one-time expense. But that taxable withdrawal still lands on your tax return — and two years later it could push you into a surcharge.

Two things worth knowing

First, it is not necessarily permanent. If your income drops back down the next year, your Medicare premium can drop back down too, once Medicare uses that lower-income year.

Second, there is an appeal — but only for the right reason. If your income dropped because of a qualifying life-changing event, like retiring or cutting back your work hours, you can ask Social Security to look at it again using a form called the SSA-44.

Simply selling an investment for a profit is not one of those qualifying events. Neither is a one-off withdrawal by itself. The event has to be a genuine change in your circumstances.

What to do about it

Before you take a large taxable withdrawal, it is worth knowing what it could do to your Medicare costs two years out. Sometimes changing the timing of that withdrawal makes a real difference.

I am not a tax advisor, so run the tax side by your CPA. But the Medicare side of it is worth understanding before you sign anything.

Planning something big and want to know where the lines are? Call or text me at 941-412-2362.

Educational only. Not connected with or endorsed by the U.S. government or the federal Medicare program.