A retiree with a $3 million traditional 401(k) begins required minimum distributions at age 73 and later receives Medicare bills reflecting IRMAA surcharges. Using the Uniform Lifetime Table divisor at age 75, the required withdrawal is about $121,951. Adding Social Security income of about $48,000 and taxable dividends of about $30,000 brings modified adjusted gross income to around $200,000. That level places the retiree in IRMAA tier 4 for single filers, which adds monthly surcharges to Part B and Part D premiums. As RMDs increase with a shrinking divisor and portfolio growth, MAGI can move toward higher tiers, raising surcharges further.
"The Uniform Lifetime Table divisor at age 75 is 24.6. On a $3 million traditional balance, that produces a required withdrawal of $121,951 for the year. Layer in $48,000 in Social Security and $30,000 in dividends from a taxable brokerage account, and Margaret's modified adjusted gross income lands near $200,000. Her lifestyle stayed the same; the IRS changed the math for her."
"That MAGI puts her squarely inside IRMAA tier 4 for single filers, which covers MAGI between $193,000 and $500,000 in 2026. The surcharge on top of the roughly $203 standard Part B premium is $487 per month for Part B and another $77 for Part D. Combined, that is $564 a month, or $6,768 a year, on top of base premiums."
"The headline number reflects what happens as the RMD grows. Each year the divisor shrinks (23.7 at 76, 22.9 at 77), and a portfolio earning anything close to its long-run average refills the balance faster than withdrawals empty it. Margaret's RMD percentage marches higher, and her MAGI drifts toward the next bracket. Tier 5, which begins at $500,000 of MAGI, carries a $730 monthly surcharge, or $8,760 a year."
"Be careful maxing 401k pretax. You will pay high taxes converting and charged extra on Medicare. So folks learn from my mistake ROTH ROTH ROTH."
Read at 24/7 Wall St.
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