Retirees who tap a traditional individual retirement account often miss a hidden cost that shows up two years down the road on their Medicare bill.
The Social Security Administration uses your modified adjusted gross income from two years before to decide whether a Medicare premium surcharge applies.
Every dollar withdrawn from a traditional 401(k) or IRA is included in that calculation, while qualified withdrawals from a Roth account are not.
Personal finance commentator Suze Orman has flagged this gap for years, and the math behind her warning has only grown sharper this year.
Higher 2026 income-related monthly adjustment amount (IRMAA) surcharges and a richer base Part B premium have made the hit more painful for retirees crossing an income threshold.
How traditional IRA withdrawals trigger the IRMAA surcharge
The IRMAA adds to standard Medicare Part B and Part D premiums for higher-income beneficiaries.
The Social Security Administration applies IRMAA based on your tax return filed two years before the premium year, creating a delayed timing trap.
A 2026 income spike from a traditional IRA distribution is reflected on the 2028 premium bill, and the surcharge applies to every month of that year.
On a Suze School episode of the Women & Money podcast, revisiting the Roth five-year rule, Orman said income from a retirement account counts toward both taxable Social Security and the Medicare premium calculation.
Why the 2026 IRMAA brackets make one withdrawal painful
The standard Medicare Part B premium climbed to $202.90 per person per month in 2026, up nearly $18 from the 2025 base level,according to the Centers for Medicare & Medicaid Services.
IRMAA surcharges layer on top, once modified adjusted gross income (MAGI) tops $109,000 for single filers or $218,000 for joint filers, the agency noted.
Total Part B premiums under IRMAA in 2026 range from $284.10 at the first tier to $689.90 at the top tier, per person.
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On her Women & Money podcast episode breaking down the Roth five-year rule, Orman said she and her wife, KT, pay around $526 per month for Medicare Part B, based on their household income.
Part D surcharges add another $14.50 to $91.00 each month, and the brackets use a cliff structure with no gradual phase-in across thresholds.
One dollar over a bracket boundary triggers the full surcharge for that tier, and the cost recurs for every month of the affected premium year. The top tier kicks in above $500,000 of MAGI for single filers and $750,000 for joint filers, CMS noted, and the figure is frozen.
Why Orman points to Roth accounts as the only clean fix
Qualified Roth distributions never count toward MAGI, so they cannot push a retiree across an IRMAA cliff, regardless of withdrawal size or timing.
Required minimum distributions (RMD), which begin at age 73 under SECURE 2.0 rules, also do not apply to Roth IRAs during the owner’s lifetime.
A 24/7 Wall St scenario shows a married couple whose MAGI crosses an IRMAA cliff after pulling an extra $60,000 from a traditional IRA.
Depending on the household’s tier, the surcharge can add roughly $1,700 to $6,700 in additional combined Part B and Part D premiums for the year.
Income from a retirement account counts towards taxable income towards your Social Security. Also, your Medicare premium amount. So you’re better off with a Roth IRA. Always
Drawing the same $60,000 from a qualified Roth account keeps MAGI untouched, so the couple sidesteps the surcharge entirely.
RMDs from traditional accounts grow as a percentage of the balance each year, which means Medicare exposure tends to worsen with age for affected retirees.
Traditional IRA withdrawals also increase the taxable portion of Social Security benefits, compounding the hit for retirees with mixed income streams, Orman noted.
Ed Slott says fearing IRMAA cannot stop a Roth conversion
Retirement tax expert Ed Slott has argued that the IRMAA penalty from a Roth conversion is brief and should not block long-term planning. He told one client, “I’d rather you be angry for one year than for the rest of your life,” to frame the trade-off.
Slott noted that the few hundred dollars in extra monthly premiums from one conversion year pale in comparison to decades of taxable IRA distributions and surcharges.
He has built much of his retirement-planning curriculum around shifting savers into Roth accounts before RMDs begin, since RMDs from traditional accounts would otherwise inflate their taxable income for the rest of their lives.
What the IRMAA cliff means for retirees with traditional balances
The IRMAA cliff turns one traditional IRA withdrawal into a delayed premium hit that surfaces on the Medicare bill two years later.
Orman has framed qualified Roth distributions as exempt from Medicare’s surcharge calculation, regardless of the withdrawal amount. Slott has argued that absorbing a short conversion penalty now beats decades of recurring premium hits later.
Medicare’s 2026 system applies higher premiums once income exceeds a set threshold. Orman and Slott have both pointed to Roth conversions completed before required distributions begin as the mechanism retirees with sizable traditional balances use to reduce future IRMAA exposure.
