How do you manage your 2025 tax return to avoid crossing an IRMAA tripwire?
Posted on September 5, 2025
If you’ve saved and invested well, you are in the top ranks of retirees in the size of your traditional IRA. That’s great, but once you start on Medicare, you have the frustration of worrying about IRMAA – higher Medicare premiums that you’d like to avoid. (IRMAA = Income Related Medicare Adjustment Amount.) Medicare states that 8% of retirees who pay Part B Medicare premiums have high income – primarily from high RMDs – that trigger added Medicare premiums. (Data source is here.) Cross a tripwire by $1 of income on your 2025 tax return, and you could pay more than $1,100 in added Medicare premiums in 2027. (Medicare data shows that the typical retiree who pays IRMAA crosses more than one tripwire.)
You know if you’ve paid IRMAA in the past. You’ll get a good sense of whether or not you are close to the next IRMAA tripwire when you complete last week’s template of your 2025 tax return.
This post provides an example of a tax payer with Modified Adjusted Gross Income (MAGI) for 2025 that crosses my estimate for IRMAA tripwire #1. For the same amount of security sales from his portfolio at the end of this year for his spending in 2026, he can use a mix of two tools to report lower income to duck under that tripwire.
1) Increase QCD (Qualified Charitable Distribution) from your RMD – eligible if you are over at 70½ – and/or
2) Sell securities from Roth IRA rather than taxable securities in your brokerage account.
== Example: MAGI crosses IRMAA #1 ==
Our taxpayer, Fred, is single and old enough to have RMD; he’s on Medicare and subject to IRMAA. Each December, Fred calculates his Safe Spending Amount (SSA, Chapter 2 Nest Egg Care) for the upcoming year based on his portfolio results for the 12 months ending November 30. He’ll sell securities equal to his SSA the first week of December. Fred plans to donate $2,000 to charities as QCD. Fred has some Roth; he paid 22% marginal tax to convert Traditional to Roth in 2019 and 2020.
Given his portfolio return year to date, he estimates his SSA is $85,000; he will sell $85,000 of securities. He’ll sell $65,000 to distribute from his traditional IRA for his RMD due this year. He must sell an added $20,000.
Fred’s first cut using the template from last week is to sell the $20,000 in addition to his RMD from taxable securities in his brokerage account. His tax return (Detail here.) shows his MAGI crosses tripwire #1 ($111,000 MAGI) by $2,400. That will result in ~$1,100 added Medicare premiums in 2027. OOPS. He doesn’t want to cross that tripwire.
== Duck with added QCD ==
Option 1. Fred examines $3,000 greater QCD. MAGI is $3,000 less and is now below Tripwire #1. Detail here. He’s avoided the ~$1,100 hit in 2027.
Fred gets a big bang for donating that added $3,000. He pays lower taxes at an effective rate of 23.8% and avoids paying IRMAA: he does not pay 22% marginal tax and gains from more Bonus standard deduction. The total benefit is the same as if he donated and gotten a 60% tax deduction. Fred nets less for him to spend because he’s donating more, but he’s happy to donate this added amount to his favorite charities rather than pay than $1,800 more to the IRS + Medicare.
If Fred had no Roth, this would be his only tool to duck a nearby IRMAA tripwire.
== Duck with Roth ==
Option 2. Fred does not increase QCD but sells $6,000 of securities and distributes from his Roth rather than selling taxable securities. MAGI is the same as in Option 1 – below Tripwire #1. Detail here.
Fred gets big bang by using his Roth. Fred previously paid 22% marginal tax when he converted traditional. Relative to it still being in his traditional IRA (He or heirs would eventually pay at least 22% marginal tax.), he benefits 41% from lower tax and no IRMAA. This is exactly what you want to do when you use Roth: get a much bigger percentage benefit when you use it than you paid when you first contributed or converted.
== The Combination ==
Option 3. Fred settles on a mix of the two. He increases QCD by $1,500 and uses $3,000 of his Roth. MAGI is the same and below IRMAA #1. Detail here.
== RMD is the long-run culprit ==
At expected returns for stocks and bonds, RMDs from Traditional IRAs increase in real terms. They will increase by about a third in the first five years and will double in the first 12. See here. These real increases push you toward IRMAA tripwires which remain constant in real terms: they adjust for inflation each year.
You only slow the creep to IRMAA tripwires by lowering your Traditional IRA by more than your RMD withdrawals. You have the same two tools that you use to duck a nearby IRMAA tripwire and no other: QCD and conversion to Roth. I’ll discuss how much you need to use these two in an upcoming post.
Conclusion. If you’ve saved and invested well, you are in the top 10% of retirees in the size of your traditional IRA. That’s great, but you have the frustration of worrying about IRMAA – higher Medicare premiums that you’d like to avoid.
Your draft tax return for 2025 might show that you are uncomfortably near or have crossed an IRMAA tripwire. You may be able to alter your income on your tax return to duck under a tripwire. You have two tools: you can increase your QCD donations; and you can sell securities sales from your Roth IRA rather than taxable securities. (If you have no Roth IRA, you can only duck with greater QCD.)
This post gives an example for a taxpayer who crosses IRMAA tripwire #1 by $2,400. That will cost him ~$1,100 in greater Medicare premiums in 2027. He can duck under the tripwire with $3,000 increased QCD donations or $6,000 sale of securities from his Roth or a combination of lesser amounts of both. The cost and tax benefit of dodging the tripwire is terrific: for example, our taxpayer gets a 40% cost and tax benefit for his use of his Roth that he paid 22% tax to get.