Here is a moment our advisors see play out the same way, year after year. A couple turns 73. They take their first required minimum distribution because the IRS says they have to. They pay the income tax on it, they feel a little annoyed, and they move on. Then about two years later a letter shows up from Social Security telling them their Medicare premium just went up by a few thousand dollars a year, and they have no idea why.
That is not a coincidence. It is the most predictable surprise in retirement, and the people it hits hardest are the ones who did everything right and saved the most.
Does a required minimum distribution really affect my Medicare premium?
Yes. Your required minimum distribution counts as ordinary income, and the size of your income determines how much you pay for Medicare. Higher income means a higher Medicare premium. The surcharge has a name most retirees have never heard until it lands on them: IRMAA, the Income-Related Monthly Adjustment Amount. For a high-income household, a first RMD can push you across an IRMAA line and add anywhere from a couple thousand dollars to more than ten thousand dollars a year to your Medicare cost. The catch that fools almost everyone is the timing, so let me walk through it plainly.
The two-year echo nobody warns you about
Most people assume their Medicare premium is based on what they earn this year. It is not. Medicare looks back two years. Your premium in 2026 is based on the income from your 2024 tax return, the one you filed in 2025. That is the official rule, straight from the Centers for Medicare and Medicaid Services.
So when you take a large RMD in 2026, it does not raise your premium in 2026. It raises it in 2028. The income lands quietly on this year's tax return, then sits there for two years before it shows up as a higher bill. By the time the letter arrives, most people have completely forgotten about the withdrawal that caused it, and there is nothing left to do but pay.
This is exactly why a little planning beats a lot of reacting. You can see this coming from years away. You just have to be looking.
What the 2026 numbers actually look like
Let me give you the real figures so this is not abstract. In 2026 the standard Medicare Part B premium is $202.90 a month per person. If your income crosses the first IRMAA threshold, that number jumps in tiers. Here is the full 2026 ladder for Part B, based on your 2024 income:
- Up to $109,000 single / $218,000 married: $202.90 per month (the standard premium)
- Up to $137,000 / $274,000: $284.06 per month
- Up to $171,000 / $342,000: $405.80 per month
- Up to $205,000 / $410,000: $527.54 per month
- Up to $500,000 / $750,000: $649.28 per month
- $500,000 / $750,000 and above: $689.86 per month
There is a separate IRMAA surcharge on your Part D drug coverage too, running from an extra $14.50 up to $91.00 a month, using those very same income brackets.
Two things make this sting more than people expect. First, in a married household, both spouses pay the surcharge, so you double every one of those numbers. Second, IRMAA is a cliff, not a gradual slope. Go one dollar over a threshold and you pay the full higher tier, not a little extra on the part that crossed the line. One dollar can cost a couple thousands.
A real example of the math
Picture a married couple, both 73, with $1.5 million in traditional IRAs between them. Their first RMD is the account balance divided by the IRS life expectancy factor for age 73, which is 26.5. That is about $56,600 of income they are required to take, on top of the Social Security, pension, and dividends they already live on.
Say that pushed their combined income from a comfortable $200,000 up to roughly $256,000. They just crossed the first married threshold. Now both of them pay $284.06 a month instead of $202.90. That is about $81 more per person, per month, which works out to roughly $1,950 a year in extra Part B premiums alone, plus the Part D surcharge on top.
Now run it for a couple with $2.5 million in IRAs. Their first RMD is closer to $94,000, which can carry them up two tiers to $405.80 a month each. That is more than $4,800 a year in added premiums for the household. And a couple sitting in the top bracket pays $689.86 each, nearly $11,700 a year more than the standard premium, just for Part B. None of that buys a single additional benefit. It is the same Medicare, at a higher price, triggered by income they were forced to take.
And there is a real penalty for getting the RMD wrong
While we are on the subject, do not miss the distribution itself. If you fail to take your full required minimum distribution on time, the IRS charges an excise tax of 25 percent on the amount you should have withdrawn but did not. The one piece of mercy in the rules: if you catch it and correct it within two years, that penalty drops to 10 percent. Still, a 25 percent hit on a missed withdrawal is a brutal price for an honest mistake, and it is entirely avoidable.
How do high-income retirees keep their first RMD from spiking their Medicare premium?
You cannot appeal your way out of a planned RMD. Social Security will reduce your surcharge for genuine life-changing events like retirement or the death of a spouse, but a required distribution you always knew was coming is not one of them. The fix has to happen before the income hits, which is why this is a planning conversation, not a damage-control one. From the conversations our advisors have with clients every week, here are the levers that actually move the needle.
Convert to Roth in the quiet years before 73
The window between retirement and age 73 is often the lowest-income stretch of someone's life, and it is the single best time to act. Moving money from a traditional IRA into a Roth in those years means you pay tax now, at today's rates, and shrink the traditional balance that your future RMDs are calculated from. Smaller balance, smaller forced withdrawals, smaller chance of tripping an IRMAA cliff later. Done thoughtfully across several years, this is the most powerful tool there is.
Use a qualified charitable distribution if you give
If you are charitably inclined, this one is close to magic. A qualified charitable distribution lets you send money straight from your IRA to a charity. It counts toward your required minimum distribution, but it never shows up in the income that determines your Medicare premium. In 2026 you can give up to $111,000 per person this way. For a couple who already donate to their church or a cause they love, redirecting those gifts through the IRA can satisfy the RMD and keep IRMAA off their back at the same time.
Watch the cliffs on purpose
Because IRMAA is all-or-nothing at each threshold, knowing exactly where the lines sit lets you manage income right up to the edge without going over. Timing a Roth conversion, deciding which account to draw from in a given year, harvesting a gain this year instead of next, these small choices add up when you can see the cliff in front of you instead of discovering it two years after you have fallen off it.
The point is simple
Your first RMD is not just a withdrawal. It is a signal that gets sent forward in time to your Medicare premium, and the people who plan for it keep money that the people who ignore it hand over for nothing. The good news is that this is one of the most foreseeable events in all of retirement. Two years of warning is plenty, if someone is watching.
If you are approaching 73, or you are already taking RMDs and you have never had anyone map how they connect to your Medicare cost, that is worth an hour. Bring your accounts and sit down with one of our advisors. We will show you where your income lands, where the next IRMAA line sits, and what you can do now to stay on the right side of it. You can reach American Retirement Advisors at 602-281-3898.
Disclaimer: The information in this article is for educational purposes only and does not constitute tax, legal, or investment advice. Tax laws change frequently, and individual circumstances vary. American Retirement Advisors does not provide tax or legal services. Before making any tax-related decisions, consult a qualified CPA, tax attorney, or financial planner who can evaluate your specific situation.