Every dollar moved from a traditional IRA into a Roth counts as ordinary income on the federal return for that year. For anyone within two years of Medicare eligibility, that income spike can trigger a surcharge adding $1,148 to $6,936 per person in annual costs. Roth conversion transactions surged 41% in the first quarter of 2026 compared with the prior year, according to Fidelity's retirement analysis, meaning a growing number of pre-retirees may be headed toward that hit.
The surcharge is called IRMAA, the Income-Related Monthly Adjustment Amount, and it arrives two full years after the conversion year. Every dollar of a Roth conversion counts as ordinary taxable income in the year it occurs, IRS Publication 590-A confirmed. A traditional individual retirement account holder who leaves funds in the account avoids IRMAA risk on that balance entirely, because no conversion triggers taxable income.
Crossing a threshold by a single dollar triggers the full surcharge for that tier across every month of the year, Donna LeValley reported at Kiplinger. The surcharge also applies per person on Medicare, so both spouses pay it individually if both are enrolled in the program. "For large conversions, factor in an additional $2,000 to $8,000 or more in annual Medicare costs," tax advisory firm SDO CPA explained.
The standard 2026 Medicare Part B premium is $202.90 per month, and IRMAA surcharges stack on top of that baseline, the Centers for Medicare & Medicaid Services (CMS) confirmed in its November 2025 announcement. The first cliff begins at a lower income level than many people approaching retirement expect, particularly for single filers. For married couples filing jointly, 2026 IRMAA surcharges begin when modified adjusted income exceeds $218,000, triggering additional Medicare costs.
Couples earning $218,000 or less pay no surcharge, with the standard Part B premium set at $202.90 monthly. Income from $218,001 to $274,000 adds $81.20 monthly for Part B and $14.50 for Part D per person. Single filers face the first IRMAA tier at $109,000 of modified adjusted gross income, up from $106,000 in 2025, a 2.8% inflation adjustment, according to the CMS 2026 fact sheet.
Pre-retirees who convert at 63 or 64 face a timing trap because the two-year lookback places conversion income at the point they first enroll in Medicare, Income Lab reported. The right annual amount "is the one that fits your tax bracket and your IRMAA comfort level," certified financial planner James Brewer wrote in Forbes. Someone who keeps $500,000 in a traditional IRA and begins required minimum distributions at 73 sees taxable income grow at a measured, predictable pace, IRS Publication 590-B showed.
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