Does 401k Distribution Count as Income for Medicare IRMAA? Latest Rates
POINTS
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401(k) withdrawals can increase your IRMAA.
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Qualified Roth 401(k) withdrawals generally don’t count.
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Traditional 401(k) RMDs can increase your IRMAA.
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Large withdrawals can lead to higher Medicare premiums.
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Proper rollovers generally don’t trigger IRMAA.
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Smart withdrawal planning can help reduce IRMAA.
Taxable 401(k) distributions are included in federal taxable income in the year they are received.
Medicare uses modified adjusted gross income from a prior tax return to determine whether higher-income beneficiaries pay IRMAA.
As a result, a taxable 401(k) distribution can affect the Medicare premiums assessed in a later year.
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See Your Medicare OptionsHow 401(k) Withdrawals Affect IRMAA
IRMAA income is modified adjusted gross income (MAGI) = (filer’s AGI) + (tax-exempt interest).
MAGI generally includes all taxable income reported on Form 1040, Line 11, plus tax-exempt bond interest from Line 2a. As a result, distributions from tax-deferred accounts such as 401(k)s, traditional IRAs, and pensions can increase MAGI.
But tax-free sources do not count.
SSA’s official MAGI thresholds for IRMAA (2023–2026) are:
| Filing Status | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|
| Married filing jointly | $194,000 | $206,000 | $212,000 | $218,000 |
| All other filing statuses | $97,000 | $103,000 | $106,000 | $109,000 |
Above these MAGI limits, Part B/D premiums rise on a sliding scale.
Timing
Because of the two-year lookback, a 401(k) withdrawal in year T affects IRMAA in year T+2.
For example, a large 2024 distribution appears on the 2024 Form 1040 and raises 2026 premiums.
If your income later falls, you can appeal with SSA-44 to use a more recent year’s MAGI. But absent an appeal, the higher premiums persist until the lookback window catches up.
Traditional vs. Roth 401(k) Distributions
| Feature |
Traditional 401(k)
|
Roth 401(k)
|
|---|---|---|
| Contributions | Pre-tax | After-tax |
| Taxes Paid | Later, when distributed | Generally paid upfront |
| Investment Growth | Tax-deferred | Tax-free if distributed as a qualified distribution |
| Qualified Distributions | Taxable as ordinary income | Tax-free |
| Early Distributions | Taxable portion may be subject to income tax + 10% additional tax | Earnings may be taxable + 10% additional tax |
| Lifetime RMDs | Generally required | Not required for the original owner |
| Medicare IRMAA Impact | Yes. Taxable distributions generally increase AGI and therefore IRMAA MAGI. | No, for qualified distributions. They aren’t included in AGI, so they don’t increase IRMAA MAGI. |
| Primary Tax Benefit | Tax savings today | Tax savings in retirement |
Examples:
- Traditional 401(k): A $50,000 distribution adds $50,000 to AGI, which increases MAGI by $50,000. The full amount is relevant to IRMAA.
- Roth 401(k) (qualified): A $50,000 distribution is tax-free, adding $0 to AGI and causing no change in MAGI or IRMAA.
- Roth 401(k) (non-qualified): If the $50,000 distribution includes $40,000 of contributions and $10,000 of earnings, only the $10,000 of taxable earnings is added to AGI.
Other plan distributions:
Similar rules apply to IRA or 403(b) plans.
Hardship withdrawals or loans, if not repaid, count as taxable income, whereas loans that are repaid and not defaulted do not count as income.
Do 401(k) RMDs Count Toward IRMAA?
Once you reach age 73, retirees must take RMDs from tax-deferred accounts.
These distributions are fully taxable income and therefore increase AGI and MAGI.
In turn, RMDs can trigger IRMAA surcharges.
For example, a retiree with MAGI just below the IRMAA threshold who takes a large RMD can jump into the surcharge range.
What Happens With a Large 401(k) Withdrawal?
A one-time large withdrawal from a 401(k) can catapult MAGI above an IRMAA threshold.
Because IRMAA is tiered, crossing even $1 above a bracket can apply a much higher premium on the entire Part B cost.
A single filer’s IRMAA kicks in above $109,000 MAGI, with the first surcharge raising Part B from $202.90 to $284.10 per month.
A single retiree with $100,000 MAGI takes a $15,000 401(k) distribution in 2024, increasing MAGI to $115,000.
In 2026, that $115,000 MAGI falls into Tier 1 ($109,000–$137,000), increasing Part B premiums to $284.10 from $202.90, about $81.20 more per month, or roughly $974 per year.
A larger $50,000 withdrawal would raise MAGI to $150,000, placing the retiree in Tier 2 ($137,000–$171,000). Part B would rise to $405.80, adding approximately $2,438 per year.
Premium Increase Projection
From SSA tables, we summarize possible premium jumps (single filer, Part B only):
| 2026 MAGI (Single) | Part B Premium | Increase vs $202.90 |
|---|---|---|
| ≤$109,000 | $202.90 | Base (no surcharge) |
| $109k–$137k | $284.10 | +$81.20/mo (+$974/yr) |
| $137k–$171k | $405.80 | +$202.90/mo (+$2,435/yr) |
| $171k–$205k | $527.50 | +$324.60/mo (+$3,895/yr) |
| ≥$205k | $649.20–$689.90 | +$446.30–$487.00/mo |
E.g. Jumping from Tier 1 to Tier 2 (crossing $137k) adds another ~$121.70/mo. Full Part D surcharges (Tier1 $14.50–$91.00) would add to these totals.
2026 IRMAA Income Limits and Premiums
The official 2026 Medicare premiums (Part B base $202.90) and IRMAA tiers (based on 2024 MAGI) are:
| Filing Status | MAGI Range (2024) | 2026 Part B Premium | 2026 Part D Surcharge |
|---|---|---|---|
|
Single (MFS/QSSP)
|
≤ $109,000 | $202.90 | + base plan premium only |
| $109,001–$137,000 | $284.10 | + $14.50 | |
| $137,001–$171,000 | $405.80 | + $37.50 | |
| $171,001–$205,000 | $527.50 | + $60.40 | |
| $205,001–<$500,000 | $649.20 | + $83.30 | |
| ≥ $500,000 | $689.90 | + $91.00 | |
|
Married Jointly
|
≤ $218,000 | $202.90 | base plan only |
| $218,001–$274,000 | $284.10 | + $14.50 | |
| $274,001–$342,000 | $405.80 | + $37.50 | |
| $342,001–$410,000 | $527.50 | + $60.40 | |
| $410,001–<$750,000 | $649.20 | + $83.30 | |
| ≥ $750,000 | $689.90 | + $91.00 |
This table is drawn from SSA’s IRMAA sliding scale tables.
How to Reduce the IRMAA Impact of 401(k) Withdrawals
Retirees have several planning tools to reduce AGI spikes and avoid IRMAA surcharges:
- Withdrawal Timing: Spread large 401(k) withdrawals over multiple years to avoid jumping brackets in any single year.
- Roth Conversions: Although converting to a Roth IRA/401(k) is taxable, it strategically increases MAGI in controlled amounts.
- Qualified Charitable Distributions (QCDs): Once ≥70½, one can transfer up to $100k per year from an IRA directly to charity.
- Asset Location: Hold tax-generating assets in Roth or tax-deferred accounts, and tax-exempt or low-income assets in taxable accounts.
- HSA Contributions: Contributions to a Health Savings Account are above-the-line deductions (lower AGI), and HSA-qualified medical withdrawals are tax-free.
- Income Smoothing: If one spouse can defer retirement income or bonuses, delaying income into years after high-IRMAA years helps.
- Annuities/Installments: Converting a large lump-sum into a lifetime annuity spreads out income.
- Gap Year Strategy: If hitting Medicare around retirement, one might briefly defer Social Security or take small part-time work to lower AGI in a crucial tax year.
Can You Appeal IRMAA After Retirement? (SSA-44 Form)
If your income has dropped due to certain life-changing events, you can petition SSA to use a more recent, lower MAGI when setting IRMAA.
This is done by filing Form SSA-44 with evidence.
Qualifying events:
- Marriage
- Divorce/annulment
- Death of a spouse
- Work stoppage or work reduction
- Loss of income-producing property
- Loss of pension income, or
- Employer settlement payment (e.g., severance).
Retirement is treated as a work stoppage.
Check any life-changing event and fill in the date(s) that the events occurred (mm/yyyy).
If your income has already been reduced by the life-changing event, enter the amount of your adjusted gross income (AGI, as used on line 11 of IRS form 1040) and tax-exempt interest income (as used on line 2a of IRS form 1040), and your tax filing status.
Will your modified adjusted gross income be lower next year than the year in Step 2?
Be aware that a voluntary large withdrawal is not listed as a qualifying event, even if it causes high income.
Medicare & IRMAA FAQs
Yes, taxable 401(k) withdrawals generally count toward IRMAA because they increase the income used to calculate your MAGI.
No, qualified Roth 401(k) withdrawals are tax-free and generally don’t increase your MAGI; however, taxable earnings from a nonqualified withdrawal can.
Yes, taxable distributions generally increase MAGI, while a later sale of previously taxed stock generally counts only the taxable gain.
No, a properly completed direct rollover generally isn’t taxable, but any amount from an indirect rollover that isn’t properly rolled over can count as taxable income.
Yes, taxable RMDs from traditional IRAs and 401(k)s increase MAGI and can push you into a higher IRMAA bracket.
Yes, certain deductions that reduce AGI can lower MAGI, but paying more tax or increasing withholding won’t reduce IRMAA.
Usually, IRMAA reflects income from two years earlier, although you can ask Social Security to reconsider your premiums after certain qualifying life-changing events.
Yes, if an amended return lowers your income, you can notify Social Security and request that your IRMAA determination be reconsidered.
No, IRMAA is based on taxable income reported for the relevant tax year, not simply when you receive the payment.
Yes, IRMAA generally applies regardless of why you received the income, although certain qualifying life-changing events may allow you to request an adjustment.
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