Your required minimum distribution (RMD) doesn’t ask what you need this year. Once you turn 73, the IRS sets the amount, and it lands on your tax return whether you spend it, reinvest it, or let it sit in a savings account.
For retirees with substantial IRA and 401(k) balances, that single mandatory withdrawal can trigger two separate cost increases in the same year. A larger share of Social Security can become taxable and Medicare premiums can climb through a surcharge known as IRMAA. The two calculations work differently, but they both respond to the same number: your adjusted gross income.
If you’ve built a sizable retirement portfolio, that overlap deserves real attention. Larger account balances mean larger required distributions, and larger distributions are more likely to carry you past the thresholds that drive both costs higher.
These are the types of complex tax issues we solve every day at Bernath + Rosenberg. Let’s take a look at how Social Security taxes, IRMAA surcharges and RMDs all fit together.
How Social Security Gets Taxed
Social Security isn’t automatically tax-free. The IRS uses a measure called combined income, your adjusted gross income plus any tax-exempt interest plus half of your Social Security benefit, to determine how much of your benefit counts as taxable income. Depending on where that figure lands, up to 85% of your benefit can be subject to federal tax.
For many retirees with multiple income sources and significant retirement savings, the practical reality is that they’re already near or at that 85% ceiling. That shifts the real planning question toward how much every additional dollar of income compounds on top of taxes you’re already paying, which is a core part of building a coordinated financial and tax plan.
IRMAA Runs on a Different Formula, but Same Trigger
IRMAA (short for Income-Related Monthly Adjustment Amount) is a surcharge added to Medicare Part B and Part D premiums for higher-income beneficiaries. It’s calculated separately from your federal income tax, using a different but related figure: Modified Adjusted Gross Income, or MAGI, which is your adjusted gross income plus tax-exempt interest, from two years earlier.
That lookback period catches people off guard. For 2026, married couples filing jointly begin paying a surcharge once their 2024 MAGI crossed $218,000 ($109,000 for individuals) with five tiers stretching up to $750,000 before the top surcharge applies. The brackets work as a cliff: cross a threshold by even a dollar, and the full surcharge for that tier applies for the entire year, not a prorated amount.
Where RMDs Complicate Things Further
For retirees aged 73 and over, with large pre-tax balances, the RMD is often the single largest income event of the year, and it isn’t optional. The IRS calculates the amount based on your account balance and life expectancy, then expects you to report it as ordinary income.
That income raises your adjusted gross income, which raises your combined income for Social Security purposes and your MAGI for IRMAA at the same time. Add a Roth conversion, a year with unusually large capital gains, or proceeds from selling a property in the same year as your RMD, and the combined effect can carry you through more than one IRMAA tier at once.
Because of the two-year lookback, the Medicare consequence of a high-income year may not show up until well after the year itself is behind you. That delay makes it easy to miss the connection between one financial decision and a premium increase that arrives later.
Another complication may arise when a spouse passes. Afterwards, the survivor inherits the IRA assets (keeping RMD volume high) but must now file under single tax status. This instantly slashes their IRMAA shelter threshold in half—from $218,000 down to $109,000. A surviving spouse can be unexpectedly blindsided by severe tax brackets and dramatic premium surcharges due to this filing shift.
Strategies to Consider Discussing With Your Advisor
A few approaches can help high-income retirees manage this overlap:
- Roth conversions before RMDs begin. Converting funds during years with comparatively lower income, often early in retirement, can shrink future RMDs and reduce the combined income exposure those distributions would otherwise create. Smaller conversions spread across several years generally work better than one large conversion that pushes you straight through a bracket.
- The OBBBA legislation from last year introduced a temporary “senior deduction” of up to $12,000 for married couples over 65, which phases out beginning at $150,000 MAGI. While retirees are proactively timing asset sales or Roth conversions to manage IRMAA brackets, it’s important to look out for the OBBBA phase-out windows so they don’t accidentally wipe out their senior deduction.
- Qualified charitable distributions. For retirees age 70½ and older, directing funds straight from an IRA to a qualified charity can satisfy some or all of an RMD without adding to your adjusted gross income. In 2026, that limit is $111,000 per individual. Because the distribution never counts as income, it doesn’t raise combined income or MAGI.
- Withdrawal sequencing across account types. Drawing from taxable, tax-deferred, and Roth accounts in a deliberate order, rather than defaulting to RMDs and Social Security alone, gives you more control over the shape of your taxable income from year to year, which is one reason tax planning and investment management work best together.
- Tracking your IRMAA room. Knowing how much additional income you can take on this year before crossing into the next surcharge tier (and remembering that the impact lands two years later) helps you time other income decisions around it.
- Filing an appeal after a life-changing event. Retirement, the loss of a spouse, or a business sale can justify asking the Social Security Administration for a new IRMAA determination rather than waiting two years for your premiums to catch up. Work with your tax advisor to file SSA Form 44 to report life-changing events like retirement or the loss of a spouse.
Get the Full Tax Picture
The RMD itself isn’t negotiable. How it interacts with your Social Security and Medicare costs is something you can plan around well before the distribution is due.
For high-income retirees, the aim is to keep one income decision from stacking costs across two systems that were never designed to talk to each other.
To map out how your RMDs, Social Security, and Medicare costs interact this year and in years ahead, schedule a meeting by calling (212) 221-1140 or email tstricker@brwealth.com.
Frequently Asked Questions
Do RMDs affect how much of my Social Security is taxed?
Yes. RMDs count as ordinary income and increase your adjusted gross income, which is part of the combined income formula used to determine how much of your Social Security benefit is taxable.
Does IRMAA apply if I haven’t started Social Security yet?
Yes. IRMAA is based on Medicare enrollment and your Modified Adjusted Gross Income. It applies regardless of whether you’ve claimed Social Security benefits.
Can a qualified charitable distribution reduce both Social Security taxes and IRMAA exposure?
Generally, yes. Because a QCD doesn’t count as income, it doesn’t raise combined income for Social Security purposes or MAGI for IRMAA calculations.
About Ted
Ted Stricker, CFP®, is a partner at Bernath + Rosenberg with over 27 years of experience specializing in custom financial plans for business owners and affluent families. Since joining the firm in 2015, he has led the wealth management team in delivering practical, independent advice tailored to each client’s unique lifestyle and goals. Based out of the firm’s multi-state offices, Ted is a member of the Financial Planning Association and helps maintain Bernath + Rosenberg’s standing as a top-ranked national CPA firm in financial planning.
Professionals associated with Bernath & Rosenberg P.C. may be either (1) registered representatives with, and securities and advisory services offered through LPL Financial, Member FINRA/SIPC, a registered investment advisor; or (2) solely tax professionals of Bernath & Rosenberg P.C., and not affiliated with LPL Financial. Tax/accounting/CPA related services offered through Bernath & Rosenberg P.C. is a separate legal entity and not affiliated with LPL Financial. LPL Financial does not offer tax advice or Tax/accounting/CPA related services.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for individualized tax advice. We suggest that you discuss your specific tax situation with a qualified tax advisor.
Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59½ may result in a 10% IRS penalty tax in addition to current income tax.
A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.
Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.
