Updated IRMAA estimates for 2025

[Gumby]

Quote:

Originally Posted by braumeister Just keep in mind that the IRMAA surcharge you pay in any given year is based on your MAGI two years prior to that. IOW, what I pay in 2023 is based on my MAGI in 2021. So whatever planning and adjusting you want to do has to be done while whistling in the dark to some extent. Definitely keep the Finance Buff's site handy to predict it as well as possible.

If you just use the limits for this year, then you will be safe because the limits two years hence will almost certainly be higher. Squeezing every penny out at the risk of losing big dollars by inadvertently going over the cliff is not the best strategy, in my opinion.

[audreyh1]

Quote:

Originally Posted by Romer Thanks. I have to plan for 2024 for the start of Medicare in 2026. I was using $194K so this was helpful. Thinking about this, does it reset on Jan 1st? I turn 65 in June so Medicare starts in June. If I go over IRMAA in 2024 is it only applicable to June-Dec of 2026 and Jan 2027 depends on year end 2025?

Yes, it only applies during a calendar year so if you start Medicare in June you will only pay the IRMAA for June-Dec based on income 2 years prior. Come Jan it resets.

[braumeister]

Quote:

Originally Posted by Romer Thinking about this, does it reset on Jan 1st?

Yes, IRMAA is on a calendar year basis, just like your tax return they use to adjust it.

[RetMD21]

Quote:

Originally Posted by Romer Thinking about this, does it reset on Jan 1st? I turn 65 in June so Medicare starts in June. If I go over IRMAA in 2024 is it only applicable to June-Dec of 2026 and Jan 2027 depends on year end 2025?

Correct

[Telly]

Quote:

Originally Posted by Gumby If you just use the limits for this year, then you will be safe because the limits two years hence will almost certainly be higher. Squeezing every penny out at the risk of losing big dollars by inadvertently going over the cliff is not the best strategy, in my opinion.

Aww c'mon, Gumby! Where's your sense of adventure gone to? The green rubber stiffening up and showing cracks?

Says Telly, who sweats the last week of December, guestimating how close the "estimates" on a few mutual funds that don't declare till December 30th might be. To figure out how much Roth conversion he can do in the last week of the year. This year it will be sweating over how far into Tier I of IRMAA to go. With the cliff, a "little bit" is senseless. A "lotta bit" is better... then there's the start of Tier II

Maybe Pokey has a handle on all this

[ERhoosier]

For those just retiring, remember that one's initial IRMAA assessment may be appealed if the 2-year look back income was significantly higher than anticipated current income due to a life changing event.....like full RETIREMENT. When I retired that 2 yr prior w#rking income was unusually high. DW & I appealed and IRMAA was cancelled based on what our actual retirement income would be.

[braumeister]

Quote:

Originally Posted by ERhoosier For those just retiring, remember that one's initial IRMAA assessment may be appealed if the 2-year look back income was significantly higher than anticipated current income due to a life changing event.....like full RETIREMENT.

Good point. But also important to realize that there is only a short list of qualified "life-changing events" that you can check. Form SSA-44 is used to request the reduction.

[TheWizard]

I hold only index funds in my taxable account so I don't have to worry about unexpected year-end Capital Gains Distributions throwing off my projected AGI for the year.
And my quarterly Vanguard statements do a good job of predicting my dividends for the calendar year.

So this makes it fairly easy to do a December Roth conversion to get my AGI up to within $2000 of the next higher IRMAA tier based on TFB's numbers...

[Koolau]

Quote:

Originally Posted by Gumby If you just use the limits for this year, then you will be safe because the limits two years hence will almost certainly be higher. Squeezing every penny out at the risk of losing big dollars by inadvertently going over the cliff is not the best strategy, in my opinion.

Too many things can sneak up on you to play it too close. I have been leaving myself around $10K to be sure. I'd like to play it closer - and I may do so this year since I'm getting a feel for what might go wrong and by about how much. But I'll not crowd the estimated limit too hard. YMMV

[RetMD21]

Quote:

Originally Posted by TheWizard I hold only index funds in my taxable account so I don't have to worry about unexpected year-end Capital Gains Distributions throwing off my projected AGI for the year. And my quarterly Vanguard statements do a good job of predicting my dividends for the calendar year. So this makes it fairly easy to do a December Roth conversion to get my AGI up to within $2000 of the next higher IRMAA tier based on TFB's numbers...

.

That's another advantage of keeping things simple but it isn't what I have done

[audreyh1]

I’ve moved to index funds as much as possible to avoid excess capital gains in taxable accounts. At this point the only thing limiting me is large unrealized gains in a few legacy funds. I tax loss harvest when possible. When one of us passes any remaining legacy funds will get a stepped up basis so they can be eliminated then.

[audreyh1]

That FinanceBuff article was updated again this past week (9/13) and says:

Quote:

We have all 12 data points out of 12 for the IRMAA brackets in 2024 (based on 2022 income). Medicare will make the official announcement soon.

https://thefinancebuff.com/medicare-...irmaa-brackets

I'm interested in the 2025 brackets too, but I will use the official 2024 as my "safe harbor" since I'm not expecting deflation in 2024.

ETA: edited to remove the link to the other article which has an older date.

[Car-Guy]

Quote:

Originally Posted by audreyh1 I ran across and article today that says they now know what the IRMAA levels are for 2024, Medicare just hasn't announced them yet. https://www.healthcareretirementplan...rmaa-brackets/ I'm interested in the 2025 brackets too, but I will use the official 2024 as my "safe harbor" since I'm not expecting deflation in 2024. Oh yeah, FinanceBuff said that too in the OP link.

That's what I do too. I'll "risk" any deflation impacts, at least for now.

[Koolau]

Quote:

Originally Posted by audreyh1 That FinanceBuff article was updated again this past week (9/13) and says: https://thefinancebuff.com/medicare-...irmaa-brackets I'm interested in the 2025 brackets too, but I will use the official 2024 as my "safe harbor" since I'm not expecting deflation in 2024. ETA: edited to remove the link to the other article which has an older date.

Quote:

Originally Posted by Car-Guy That's what I do too. I'll "risk" any deflation impacts, at least for now.

Gotta play it safe. I'll leave a little extra margin as well - just in case I have forgotten some income or other. The price of failure is too high on this one - especially since it's all or nothing.

[Car-Guy]

I started getting serious about working up my 2023 Tax Return this weekend using TT from 2022. It should be pretty close. Mainly for planning purposes and to prepare for any last minute adjustments I may want to make in late December. I'll probably leave myself some wiggle room for the 2025 IRMAA tax, but then I got thinking , if I were to allow my myself to creep up into the 1st IRMAA tier, the world isn't going to come to an end for me. The tax/penalty is less than 1k per person for the year. Sure why pay more tax than needed but it's really pretty small (from my POV) when you start talking about incomes of a little over 250k. Heck the basic income tax bracket(s) at that level take a much bigger bite than IRMAA will. (That will probably stop me from doing this) I know, it's a slippery slope since why not tier 2 or 3 or higher. But it's all relative, I guess..

I know this must sound like I'm trying to talk myself into something?

[statsman]

I sometimes wonder if the goal to avoid as much of the IRMAA tax as possible leads to investment decisions that could cost some return on the portfolio. I'm just guessing as we're nowhere near having this problem as the wealthy members of this forum, of which seems to be a lot.

[MarieIG]

Quote:

Originally Posted by statsman I sometimes wonder if the goal to avoid as much of the IRMAA tax as possible leads to investment decisions that could cost some return on the portfolio. I'm just guessing as we're nowhere near having this problem as the wealthy members of this forum, of which seems to be a lot.

The goal - for some - is not to avoid as much IRMAA as possible, but it is to avoid accidently tipping over into a higher bracket. As far as "returns" we have to consider our bottom line. If I can gain an extra 1k in dividends or interest, but it's costing us $6k in IRMAA - I would prefer to avoid that.

[audreyh1]

Quote:

Originally Posted by Car-Guy I started getting serious about working up my 2023 Tax Return this weekend using TT from 2022. It should be pretty close. Mainly for planning purposes and to prepare for any last minute adjustments I may want to make in late December. I'll probably leave myself some wiggle room for the 2025 IRMAA tax, but then I got thinking , if I were to allow my myself to creep up into the 1st IRMAA tier, the world isn't going to come to an end for me. The tax/penalty is less than 1k per person for the year. Sure why pay more tax than needed but it's really pretty small (from my POV) when you start talking about incomes of a little over 250k. Heck the basic income tax bracket(s) at that level take a much bigger bite than IRMAA will. (That will probably stop me from doing this) I know, it's a slippery slope since why not tier 2 or 3 or higher. But it's all relative, I guess.. I know this must sound like I'm trying to talk myself into something?

Ha ha, I have to fight to remain in the first IRMAA tier and managed for 2022. I may do some tax gain harvesting to stay there this year for 2025. Mostly capital gains income so I’m not dealing with higher tax brackets.

[rkser]

Does the 2022 Turbo Tax Phone App show the completed ‘What If Form’ ?

Intent is to see 2023 Taxes & IRMAA on the TT phone app

[Koolau]

Quote:

Originally Posted by statsman I sometimes wonder if the goal to avoid as much of the IRMAA tax as possible leads to investment decisions that could cost some return on the portfolio. I'm just guessing as we're nowhere near having this problem as the wealthy members of this forum, of which seems to be a lot.

Heh, heh, there's that word again - wealthy - we've never been able to define it. I'm not a 1 percenter but I'm sure I'm a 10 percenter.

In my case, it's considered "income" if I take money from my 401(k) and place what's left after taxes withheld into a taxable account. That makes me look "wealthy" - at least for tax and possibly IRMAA purposes. Why would I begin "emptying" my 401(k)? Primarily to have more control over future RMDs but also, I'm contributing to charities "with a warm hand." - see the thread on the subject. https://www.early-retirement.org/for...nd-119265.html

So what I actually SPEND has little to do with my income (other than defining parameters of "possible" spending.)

Wealthy? It's just a word - usually used almost as a pejorative implying someone else (apparently) has more money than you do.

But to your point: It IS important to keep perspective and keep your overall financial goals in mind. You can't just focus on what something might cost you. You have to juggle several (sometimes competing) issues like taxes, IRMAA, other tax gotchas as well as potential for gain and growth. It's complicate as you point out so YMMV.