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Beware of the “IRMMA Trap” When Making Your Retirement Plans - Money.com
Discussion of the requirements for minimum distributions (RMDs) usually focuses on the tax effect. Especially since your RMDs can go up as you age. Marc Gubert has written an article with some pointers to help you avoid “The Potential Tax Trap,” as he calls it. You can read his full article here ….
But just as important in your retirement plans is the “IRMAA Trap.” IRMAA stands for Income-Related Monthly Adjustment Amount. The easiest way to become subject to IRMAA is the fact that Social Security bases your income on your tax return from two years prior. The reason is that it takes Social Security almost two years to receive it. If you file an extension, it can take almost three years.
The Medicare Modernization Act was passed on December 8, 2003. This legislation adjusts Medicare premiums based on income to ensure higher-income beneficiaries contribute more to the Medicare program. The Modified Adjusted Gross Income (MAGI) limits in 2026, which are based on your 2024 tax return, are $109,000 for individuals and $218,000 for married individuals. If your MAGI is over these amounts, you will be subject to IRMAA.
When making your final retirement plans, look not only at the tax liability when you start your RMDs, but also at your MAGI to see if those withdrawals will subject you to IRMAA.
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If you have questions on taxes, please contact a tax advisor. If you have questions about Social Security or IRMAA, email your questions to ssadvisor@amacfoundation.org or call (888) 750-2622 to speak with an Accredited NSSA Social Security Advisor.