Roth Conversions and Medicare Premiums
We had converted some IRA funds to Roth accounts. This increased our Medicare and Part D premiums. We have more to convert. Is it better to do as much as possible to more quickly lower Medicare costs in the future?
Terry Says
Yes, for two reasons: First Medicare looks back two years to decide on a premium increase. And then it will roll off in a year or two as new returns show lower income. So better to get it all done at once — but only if you have money outside your IRA to pay the taxes upfront.
And second, because it looks like tax rates will move higher in future years (unless they pass a bill making an increase retroactive to all of 2021!). Please consult your tax expert on the specifics of how an additional conversion this year might impact your existing tax bracket.