A large water-rights payment triggers Medicare IRMAA surcharges two years later, because SSA uses tax returns from two years prior to set premiums. Only taxable gain counts toward MAGI, not the gross payment, so how the deal is characterized (option, lease, or sale) determines if surcharges apply. Crossing an IRMAA threshold by $1 triggers the full year's surcharge, which can reach up to $487 more per month for Part B at the top tier.
Two retirees, same $1 million, same 4% rule, buy one finished with $1.4 million, the other hit $0 in 12 years. Our free reader guide explains the flaw that separated them, and the income-first method built to avoid it. The Colorado River Municipal Water District, a utility based roughly 150 miles away that supplies Abilene, Midland, and Odessa, has paid La Escalera Ranch $1.3 million for what the Houston Chronicle describes as a kind of hold on the water.
Under the groundwater option agreement, if and when the utility begins pumping, it will pay at least another $2 million annually. The deal was finalized last year and made public this summer. It made news as a water story.
For a landowner on Medicare, or approaching 65, a deal shaped like this one is also a premium story. Say a hypothetical rancher in his mid-sixties signs an option like that one. He holds the land personally rather than through a corporation, he is two years into Medicare, and his wife enrolls next year.
What happens to his Medicare premium turns less on the size of the check than on when the income is recognized and how it's characterized. Neither answer arrives quickly. IRMAA, the Income-Related Monthly Adjustment Amount, reaches roughly 8% of people with Medicare Part B.
If household modified adjusted gross income (MAGI) sits well under $109,000 single or $218,000 joint, none of this reaches you either. Every retiree knows about the 4% rule, but it frames retirement as a slow liquidation and still causes retirees with seven-figure accounts to agonize over a dinner out. There's a different way to run the math that makes more sense today.
Extract — continue reading at the source.
