Large 401k Withdrawals May Trigger Higher Medicare Premiums
The Social Security Administration may increase Medicare premiums for retirees aged 63 and older who take large withdrawals from tax-advantaged accounts.
Retirees aged 63 and older face the risk of significantly higher Medicare premiums if they make large withdrawals from 401(k) or similar tax-advantaged accounts. This occurs because the Social Security Administration utilizes a two-year look-back period to determine premium costs, meaning income reported at age 63 directly impacts the costs incurred when the individual reaches age 65.
High Modified Adjusted Gross Income can trigger the Medicare Income-Related Monthly Adjustment Amount, a surcharge known as IRMAA. This adjustment increases monthly Part B premiums by amounts ranging from $81.20 to $487.00.
While the surcharge is generally mandatory for any year the income threshold is exceeded, individuals may request a reconsideration of the cost. Such requests are typically granted following major life-changing events, including work stoppage, the death of a spouse, or divorce.
