Filling Income Brackets to Avoid IRMAA

[BubbaChris]

Quote:

Originally Posted by MSDalt BubbaChris, clearing the 2nd to 3rd IRMAA hurdle by $1 would have increased a Medicare premium by $1,460/person for 2022. For a married couple that would be $2900+. In my opinion that is something to avoid. Even if it takes me 10 hours to figure out how to avoid our IRMAA, my payback rate is $290+ per hour - tax free!

Thanks for the reminder that I should slow down when reviewing analysis I did months ago. With doubling the impact for MFJ, that’s still a 2% hit to effective tax rate. This assumes you end up well over the threshold for that next tier.

We’re still in the mode of managing MAGI for ACA credits, which are close to 10x the impact when compared to IRMAA.

Best regards,
Chris

[audreyh1]

In our case it’s generally IRMAA levels now (for 1 year) versus higher ongoing taxes in the future which could easily swamp the one year IRMAA sacrifice.

That takes a lot of work to figure out every year for us as our income is very unpredictable.

We pay IRMAA every year, it’s just a question of which tier. Just one of us on Medicare at this point.

For 2022 our taxable income dropped quite a lot and 2024 would have been the first year with no IRMAA. However, I took the opportunity to sell a couple of funds that tend to have higher distributions while the markets were down. So that put us in the first IRMAA category for 2024, still lower than any year so far. And reduces distributions generated by our taxable investments in the future.

[SevenUp]

Quote:

Originally Posted by MSDalt ...clearing the 2nd to 3rd IRMAA hurdle by $1 would have increased a Medicare premium by $1,460/person for 2022. For a married couple that would be $2900+. In my opinion that is something to avoid.

Yes, going over any IRMAA cliff by $1 is something to avoid.

Whether it is Worth pushing through...IRMAA cliffs (i.e., going well beyond $1 over) is a different question.

[MSDalt]

Quote:

Originally Posted by SevenUp Yes, going over any IRMAA cliff by $1 is something to avoid. Whether it is Worth pushing through...IRMAA cliffs (i.e., going well beyond $1 over) is a different question.

We perform Roth conversions to fill the gap to the next (expected) IRMAA hurdle. It takes some work to track this, but the hourly wages for the work are good.
I expect nothing but higher tax rates in the future with the huge and growing Federal Deficit so Roth conversions are timely at this point.