Updated IRMAA estimates for 2025

Thanks for the alert. :)

I have danced with IRMAA only once before. But CGs from a managed growth fund in taxable that we have had for over 25 years, has been crimping our Roth conversion amounts more and more each year. This tax year we decided to transfer it in kind, and sell it, and put it into an index ETF. So big CGs for selling it in 2023, and hope to get some Roth conversion in, too. Plan is to get near the top end of Tier 1 for 2025 (tax year 2023).
 
I also use TFB's IRMAA projections for two years hence.
But it's early to be finalizing your AGI for the current year.

He'll update that projection a few times between now and December, at which point I'll have a good estimate on my AGI for the year and be able to decide how big a Roth conversion to do to come up close to the next higher IRMAA tier in 2025.

I hold only stock index funds in my taxable account so do not expect any year-end CGDs to impact my numbers...
 
It's always a pain to deal with IRMAA. I've been doing my best to "drain" my 401(k) a bit at a time (through RMDs and extra) in order to Roth (in the old days) and now to either fund charities or place in taxable vehicles.

My two fold objective is to reduce future RMDs and secondly to leave DW set up better tax wise when she is no longer part of a couple for tax purposes. Titrating the income is tricky, because there can be surprises along the way in terms of little bits of income here and there. I like to leave a good margin for error.

I find it astounding to be throwing around income numbers like $200K or more! It doesn't mean that we spend anything like that amount, but in terms of "realization for tax or IRMAA purposes" it adds up when you wish to make a difference in an expanding 401(k). (1st world problems are the best - I might make that my tag line some day.)
 
Koolau said:
My two fold objective is to reduce future RMDs and secondly to leave DW set up better tax wise when she is no longer part of a couple for tax purposes. Titrating the income is tricky, because there can be surprises along the way in terms of little bits of income here and there. I like to leave a good margin for error.
Click to expand...

I like to have a good margin for error. Holding stocks as well as funds and tax exempt bonds in the taxable account is a headache.
 
With our pension, SS and future RMDs, we will most likely be in IRMAA category as we age, possibly before.
I thought I understood it, but recently had a friend tell me something different.

Based on the article above, to avoid IRMAA in 2025, our income this year, in 2023, needs to be below $208,000, correct ?

My friend told me $194,000. But my research says that that would have been the amount of income from 2021 for IRMAA this year. and we were below that.

It is confusing to have the two year look back, but it is what it is. And I am thankful to have the income we do. We worked hard for our pensions! Never thought I would be in this situation.
 
pacergal said:
Based on the article above, to avoid IRMAA in 2025, our income this year, in 2023, needs to be below $208,000, correct ?

My friend told me $194,000. But my research says that that would have been the amount of income from 2021 for IRMAA this year. and we were below that.
Click to expand...

Yes, you have it right.

Agreed, it's not as straightforward as expected, but the reason is just that they can't assign you to an IRMAA tier until they know what your income was.
 
pacergal said:
With our pension, SS and future RMDs, we will most likely be in IRMAA category as we age, possibly before.
I thought I understood it, but recently had a friend tell me something different.

Based on the article above, to avoid IRMAA in 2025, our income this year, in 2023, needs to be below $208,000, correct ?

My friend told me $194,000. But my research says that that would have been the amount of income from 2021 for IRMAA this year. and we were below that.

It is confusing to have the two year look back, but it is what it is. And I am thankful to have the income we do. We worked hard for our pensions! Never thought I would be in this situation.
Click to expand...


My understanding is the $194K was 2 years back - effective for 2023(?) But the $208K is earned in 2023 for 2025 IRMAA limit. It gets complicated because it's a look back rather than a year for year amount.



Do your own research. Check this site: https://thefinancebuff.com/medicare-irmaa-income-brackets.html#htoc-2025-irmaa-brackets
 
Thank you, braumeister and Koolau, for confirming!
 
I just made my first pass at estimating my 2023 taxes (using 2022 Turbo Tax) so I could prepare for any adjustments I may need/want to make before year end.

Then I got thinking about this (IRMAA) thread. Using the info in the link below which they claim was updated this month.

https://thefinancebuff.com/medicare-irmaa-income-brackets.html#htoc-2025-irmaa-brackets

It says the "projected" 1st IRMAA tier in 2025 for a MCFJ in 2023 will be 212k, if inflation is 3% for this year. Looks like the avg inflation will be more than 3% for 2023. "So, it seems like it should be "very safe" to use 212k for planning purposes in 2023 to stay out of IRMAA trouble in 2025. The last few years I've pushed it pretty close and have been "lucky" and I intend to do that again this year. So at this point, does anyone have a better estimate with data/logic to back it up?
 
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This is what the header for that table says:

If annualized inflation from August 2023 through August 2024 is 0% (prices staying flat at the latest level) or 3% (approximately a 0.25% increase every month), these will be the 2025 numbers:
Click to expand...

So it's the next 12 months that count. Still the 3% assumption looks very safe to me.
 
Yeah, it's all such a pain and you don't want to go over by even a dollar. I always stay conservative. YMMV
 
There's nothing quite like planning for IRMMA, the number is a cliff value so you don't even want to go one dollar over and the number reflects income two years ago. For me I treat this like golf: You want to aim for the center of the green.
 
TFB is The Place to go to for IRMAA projections, not just starting point IRMAA but all tiers...
 
this is helpful. Thank you. I turn 65 in 2026 so interested in those numbers. I will use the $212K number now for my advanced planning and adjust as I get closer
 
Romer said:
this is helpful. Thank you. I turn 65 in 2026 so interested in those numbers. I will use the $212K number now for my advanced planning and adjust as I get closer
Click to expand...

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.
 
braumeister said:
The Finance Buff. See link posted above by Car-Guy.
Click to expand...

Or the first link in the thread. It is all going to the same place with monthly updates. Next month we'll have the final numbers for 2024. Although not helpful for planning these will tell you which IRMAA group you will be in for that year.
 
braumeister said:
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.
Click to expand...

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?
 
braumeister said:
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.
Click to expand...


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.
 
Romer said:
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?
Click to expand...

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.
 
Romer said:
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?
Click to expand...

Correct
 
Gumby said:
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.
Click to expand...
Aww c'mon, Gumby! Where's your sense of adventure gone to? The green rubber stiffening up and showing cracks? :D

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 :eek:

Maybe Pokey has a handle on all this ;)
 
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