Converted IRA to Roth — Now must pay more for Medicare!
Terry,
Background: I am 66, retired, receiving a pension and plan to begin taking Social Security at 70.
Preparing for the future, I have moved funds from my Traditional IRA to a Roth in each of the last two years, having funds withheld for income taxes.
Because the amount withdrawn from the Traditional IRA increased my Adjusted Gross Income I now have to pay more for Medicare (double, I believe) and no longer qualify for a Senior Freeze on property taxes. There may be other impacts I haven’t come across yet.
I am not complaining about having to pay income tax on the IRA withdrawal – – I know that’s the deal – – but it doesn’t seem right that the withdrawal’s inclusion in Adjusted Gross Income effects (for example) Medicare when the funds went directly to another IRA.
Are you aware of a way around this?
Thank you for your help.
Terry Says
No, no way around this IRRMA issue — higher costs for Medicare PartB and D if you have higher income. The only consolation is that this will disappear in two years when your income drops. Keep checking and don’t hesitate to contact SS to update your earnings and lower your cost of Medicare next year. The adjustment lags by two years.
Here is a graphic of how much more you pay for Medicare in 2021 based on your income in the past two years. I posted it below — but easier if you click the link to see the chart at Medicare.gov.
If your yearly income in 2019 (for what you pay in 2021) was You pay each month (in 2021)
File individual tax return File joint tax return File married & separate tax return
$88,000 or less $176,000 or less $88,000 or less $148.50
above $88,000 up to $111,000 above $176,000 up to $222,000 Not applicable $207.90
above $111,000 up to $138,000 above $222,000 up to $276,000 Not applicable $297.00
above $138,000 up to $165,000 above $276,000 up to $330,000 Not applicable $386.10
above $165,000 and less than $500,000 above $330,000 and less than $750,000 above $88,000 and less than $412,000 $475.20
$500,000 or above $750,000 and above $412,000 and above $504.90
Part B deductible & coinsurance
In 2020, you pay $198 ($203 in 2021) for your Part B deductible. After you meet your deductible for the year, you typically pay 20% of the Medicare-approved amount for these:
