IRMAA for retired physicians: how timing income can save $2,920 in Part B

What the IRMAA rule says, and what doctors repeat in the hallway

Doctors often say, 'Earn over a certain amount and Medicare costs more.' The real rule is narrower. Medicare uses MAGI, which is adjusted gross income plus tax-exempt interest (Form 1040 line 11 plus line 2a). Each premium year reads the tax return from two years prior, so the 2026 premium uses the 2024 return.

The tiers are cliffs, not a slope. Joint MAGI of $274,001 puts each spouse at $405.80 a month instead of $284.10. One dollar over the line costs $121.70 a month per person, or $1,460.40 a year.

The surcharge applies to each enrolled person separately, and it also adds to the Part D drug premium. Social Security uses the latest return the IRS has sent, which can be three years old, and corrects the amount once a newer return arrives.

The usual advice skips two groups. A doctor who stops or cuts back work can file Form SSA-44 for a work stoppage or work reduction and ask Social Security to use current income. And someone who keeps group coverage through current employment and delays Part B pays no Part B premium until enrolling.

What the rule measures

Who can get around it

Step 1: Gather the paperwork that sets your premium

Annex Wealth Management asks clients for the same short pile before any talk of conversions. Social Security mails the IRMAA initial determination letter when you enroll or when your income changes, so look for it first.

Then write two years side by side on one line: the 2024 return sets the 2026 premium, the 2025 return sets 2027. Fill in your own years.

Checking only the W-2 is the slip at this step. Locums pay, municipal bond interest and conversions all count toward MAGI. A couple with a $200,000 salary and $80,000 of 1099 shifts already sits at $280,000 before interest, above the $274,000 line.

• Form 1040, lines 2a and 11
• W-2 from the salaried job
• 1099-NEC or 1099-MISC from each locums agency
• 1099-R for any conversion or 457(b) payout
• 1099-INT and 1099-DIV statements
• Social Security's IRMAA determination letter

Step 2: Which tax year will Medicare look at when you turn 65?

Medicare looks at your return from two years back: the year you turn 63 sets your Part B premium at age 65, and the year you turn 64 sets it at 66. Spouses filing jointly share one MAGI, so a single year can hit one spouse or both, depending on who is already on Medicare.

Jun and Patrice (hypothetical), 44 and 43, are looking ahead to their early 60s. One is a pediatrician on salary; the other is an emergency physician with W-2 pay plus 1099 locums shifts. They have no children, $900,000 saved and about $80,000 of side income each year. Say they expect joint MAGI of $300,000, which puts Part B at $405.80 each on the 2026 tiers (used here for illustration), and they plan a $100,000 Roth conversion.

Convert in the year Jun turns 63, and MAGI becomes $400,000. His age-65 Part B rises to $527.50, which is $121.70 more each month: $121.70 × 12 = $1,460.40 extra.

Convert in the year Jun turns 64, and the same $100,000 also lands in the year Patrice turns 63. Both premiums rise, so the cost doubles: $1,460.40 × 2 = $2,920.80.

Convert in the year Jun turns 62, and no Part B premium looks back to that year. The surcharge is zero. Assuming the same tax bracket, the income tax is about the same in all three years.

Social Security won't see the conversion until the 1099-R and the return reach the IRS, so the bill shows up in a premium letter two years later, not in the conversion year.

The three conversion years

How the premium scales

Step 3: What should you ask HR, the 457(b) plan and the custodian?

Ask HR whether your coverage after 65 is a group health plan based on current employment. Locums 1099 work gives you no such coverage, so delaying Part B is usually not an option for those shifts. A salaried job's employer plan is different, and you can often delay Part B without penalty.

Ask the 457(b) plan administrator how payouts begin after you separate from service, and whether your distribution election can be changed. The answer that should worry you is 'a lump sum, or fixed payments, starting the year after you leave.' That can drop a large payment into your age-63 or age-64 lookback year. A plan that lets you set the start date and amount each year gives you room to steer around the tiers.

Ask the custodian when it issues the 1099-R for a conversion, and whether it withholds tax. A conversion completed on December 31 still counts in that year's MAGI, so a late-December trade buys no grace. Annex Wealth Management asks clients for these three answers before suggesting any change to a payout election.

One more slip: assuming a salaried job's group plan covers your locums shifts. It doesn't.

HR and your employer plan

The 457(b) administrator

The custodian

Step 4: Sort the moves that cut tax from the ones that only shift it

Pre-tax solo 401(k) deferrals on locums income lower AGI in the year you make them, but that money is taxed when it comes out (the contribution math is in our solo 401(k) article for locum tenens income). Roth conversions add to MAGI now. Qualified Roth IRA and HSA distributions don't count toward MAGI, while municipal bond interest does. Qualified charitable distributions after age 70½ stay out of AGI entirely, which makes them the only move on this list that removes income instead of shifting it to a different year.

Step 5: Should Jun, Patrice and Curtis convert in the same year?

No. Jun and Patrice file jointly, so at $250,000 of MAGI they sit in the $284.10 tier, and a modest conversion at age 63 may cost little extra premium. Curtis (hypothetical), a single physician, lands in the $649.20 tier at the same $250,000, so he gains more by finishing conversions before the year he turns 63.

The table lays the three timing options side by side for Jun and Patrice's $100,000 conversion. If their later years carry a higher bracket because required minimum distributions (RMDs) add income, the last column gets worse. If Medicare indexes the tiers upward, the dollar amounts move too.

Unless you're on Medicare before 65, put large discretionary income (Roth conversions, taxable gains, a practice-interest sale) in years before the year you turn 63. From that year on, check whether the income crosses the next tier line, and cross it only when the long-run tax saving clearly exceeds the yearly surcharge.

The trade-off: accept a higher tier for one or two years if the conversion clearly lowers RMD-driven income later. Keep income under the line if the conversion only moves tax from one year to another at the same rate. On a $100,000 conversion, the federal tax usually dwarfs a one-tier surcharge, so don't drop a sound conversion just to save one tier. Markets can fall, and a conversion made just before a drop is taxed on the higher value.

A Roth conversion done in the year Jun turns 64 instead of the year Jun turns 62 raises both premiums two years later. For Jun and Patrice that adds $2,920.80 in Part B alone, for the same income tax they could have paid with no surcharge. Annex Wealth Management clients see that gap marked on the calendar before a conversion is placed.

Tier by filing status

Rule for choosing the year

Step 6: Recheck any plan written under the old RMD and IRMAA rules

Plans written years ago often assumed RMDs at age 70½ or 72, a recharacterization option for reversing a Roth conversion, and no $500,000/$750,000 top tier. The IRS now starts RMDs at age 73, or at age 75 for people born in 1960 or later, which includes Jun and Patrice. Conversions can no longer be undone, and the top Part B tier now reaches $689.90 a month. A plan built on the old assumptions puts forced income and conversions in the wrong years.

Send Annex Wealth Management your premium letter and latest return

Annex Wealth Management advisors start from your monthly spending plan. Then they mark which future tax years will feed a Medicare premium before suggesting a conversion or a 457(b) payout election. Send the IRMAA letter or your latest Form 1040 through the request form. You sign a fee agreement first, and our work starts after that.