The Hidden Cost of a Roth Conversion Nobody Warned You About

A poorly timed conversion in your early 60s can raise your Medicare premiums for years. Here is what to know before you convert.

Most people do not know that a large Roth conversion in the wrong year can quietly raise their Medicare premiums by thousands of dollars. And the increase does not show up until two years after the conversion happens, which is exactly what makes it so easy to miss.

Roth conversions make a lot of sense on paper. Convert pretax savings to Roth now, pay the taxes today, and enjoy tax free growth for the rest of your life. For the right person in the right year, it is a genuinely powerful move. But the rule behind what can go wrong is called IRMAA. If you are in your early 60s and planning conversions, you need to understand this before you act.

What IRMAA Is

IRMAA stands for Income Related Monthly Adjustment Amount. It is a surcharge added on top of your standard Medicare Part B and Part D premiums when your income exceeds certain thresholds. The more your income exceeds those thresholds, the higher the surcharge goes.

Most people assume Medicare comes with one standard monthly premium. That is only true if your income stays below the base bracket. For everyone else, IRMAA adds a meaningful extra cost on top of that. A Roth conversion counts as ordinary income in the year you take it, which means a large conversion can push you across one or more IRMAA thresholds in a single year.

What Medicare Premiums Actually Cost Across the Brackets

For Part B, the Centers for Medicare and Medicaid Services estimates the true cost of services per enrollee each year. Your premium is then set as a percentage of that true cost depending on which IRMAA bracket your income falls into.

For 2026, the estimated true cost of Part B is $811.60 per enrollee per month. Part D carries a comparable true cost of $152.90. Here is what you actually pay at each bracket:

Part D adds surcharges calculated the same way on top of that. Moving from the base bracket to Tier 2 for Part B alone adds more than $200 per month, over $2,400 per year, per person. And because Medicare costs have historically risen at 5 to 6 percent annually, those IRMAA additions are likely to get larger every year you stay in a higher bracket.

The Two Year Lookback That Catches People Off Guard

Medicare does not base your premiums on what you earned this year. It looks back two years.

The income you report in 2026 determines your Medicare premium costs in 2028. So if you turn 65 in 2028, the IRMAA surcharge assigned to you on day one of Medicare enrollment is based on your 2026 tax return, which by that point is already filed and long forgotten.

This is why age 63 is such a critical year in Roth conversion planning. The income you report at 63 sets your Medicare premiums at 65. A large, poorly timed conversion at 63 can raise your Medicare costs starting the moment you enroll, with no way to change it after the fact.

What Thoughtful Conversion Planning Actually Looks Like