How Retirees Actually Lower MAGI to Avoid IRMAA

The foundation
Know what counts toward MAGI before you try to shrink it

The most common mistake I see is people optimizing the wrong number. IRMAA's MAGI is your Adjusted Gross Income plus tax-exempt interest (like municipal bond interest), plus a few other add-backs. Two surprises catch retirees every year:

• Municipal bond interest counts. It is exempt from income tax, but it is not invisible to Medicare. I have seen people hold a large muni portfolio thinking it was IRMAA-safe, and it was not.
• Capital gains, Social Security (the taxable portion), IRA distributions, and pension income all count. This is ordinary AGI, not some exotic definition.

What does not count: qualified Roth IRA withdrawals, qualified HSA withdrawals used for medical expenses, return of principal on a bond or CD, and home sale proceeds sheltered by the capital gains exclusion. Those are the raw materials of a MAGI plan.

The highest-leverage moves, ranked by my judgment

1. Qualified charitable distributions (QCDs)

If you are 70 and a half or older and give to charity anyway, a QCD is the single best IRMAA tool available. You move money directly from your IRA to a qualified charity. It can satisfy all or part of your required minimum distribution, and the distribution is not included in your AGI, which means it does not touch your MAGI either. Compare that to taking the RMD yourself and then donating the cash: same charity gets the money, but the second version inflates your MAGI and can trigger IRMAA. One planner's example put it well: a $5,000 QCD instead of that last IRA withdrawal can be the difference between zero surcharge and a tier jump.

2. Size Roth conversions around the IRMAA cliffs, not just tax brackets

Roth conversions are one of the few large income events you fully control, and they are also the most common accidental IRMAA trigger. The full converted amount adds to your MAGI in the year of conversion. Two rules:

• Do the big conversions in your gap years, ideally more than two years before Medicare starts, so the income lands in lookback years that do not set your premium. Age 63 is when your income starts affecting your age 65 Medicare rates, so the window narrows fast.
• Never cross a threshold by accident. The difference between $108,999 and $109,001 of single MAGI for 2026 is $1,148.40 per person per year in surcharges. Run the Roth conversion cliff planner before executing, and either stop short of the line or deliberately use more of the tier once you have crossed it.

3. Keep a capital gains budget

Plan and limit taxable asset sales each year. A rental property sale, a concentrated stock liquidation, or an options exercise can blow through several IRMAA tiers at once, and one dollar into Tier 4 costs the same as $40,000 into Tier 4. Tactics: installment sales, splitting a sale across two tax years, harvesting losses to offset gains, and donating appreciated shares to charity instead of cash. The goal is to keep each year's realized gains under your planned ceiling.

4. Coordinate withdrawal order across account types

In a given year, you can pull cash from a taxable brokerage account, a traditional IRA, and a Roth IRA in different proportions and produce wildly different MAGI figures for the same total spending. Drawing more from Roth in a year when you are near a cliff, and more from traditional accounts in a year with headroom, smooths your MAGI across the line. This is the boring, year-by-year work that saves the most money.

5. Use HSA withdrawals for medical expenses

If you still hold an HSA, qualified medical expense withdrawals are tax-free and do not count toward MAGI. In a tight year, routing medical spending through the HSA instead of pulling extra from an IRA can keep you under a threshold.

6. Watch the surprise distributions

Mutual fund year-end capital gains distributions are the classic ambush: you did everything right, then a fund pays out $4,000 of gains in December and shoves you over the line. Prefer ETFs or funds with low turnover in taxable accounts, and run a fall MAGI projection (see below) so nothing surprises you.

The yearly routine that makes this automatic

None of the tactics above work if you only think about IRMAA in April. The routine that planners recommend:

1. October: project your MAGI. By fall you know your dividends, interest, RMD, pension, and Social Security. Add planned sales and any Roth conversion. See where you land against the threshold.
2. Leave a buffer. Aim to finish $3,000 to $5,000 below the nearest threshold, not $200 below it. The buffer absorbs surprise distributions and estimation error.
3. December: execute the final adjustments. This is when you do the QCD, finalize the Roth conversion amount, or harvest the loss. Once January arrives, the tax year is closed and nothing can be undone.
4. Remember the two-year lag. 2026 income sets 2028 IRMAA. Every decision you make this year echoes two years out.

When lowering MAGI is not the answer

Sometimes the right move is to accept a tier and use it. If a large Roth conversion pushes you into Tier 2, but doing it over three years would mean three years of Tier 1 plus three years of complexity, the math may favor one clean conversion. Paying IRMAA for one year to permanently reduce future RMD-driven MAGI is often a good trade.

And if your income already dropped because of a qualifying life-changing event, you may not need any of these tactics: file Form SSA-44 and ask Social Security to use your current income instead of the two-year-old figure. That is a separate process from MAGI planning, and our companion guide walks through it.

Put numbers on it

For 2026, the single-filer standard threshold is $109,000 and the joint threshold is $218,000. Crossing into Tier 1 costs $1,148.40 per person per year; Tier 1 to Tier 2 costs another $1,736.40. A couple where both spouses are on Medicare pays double. Check your tier and cliff distance

Thresholds from CMS "2026 Medicare Parts A & B Premiums and Deductibles" fact sheet, November 14, 2025.