I came to the same conclusion a couple years ago. Now, I don't think you ignore these things but perseverating over them (like I did for a couple years) adds to ones stress level immensely. I was watching a guy on Heritage Wealth Planning and, in a nutshell, his financial arguments and presentations were so convincing (about limiting income taxes in retirement) I would not use my retirement money at all for "fear" of paying too much in taxes. That's crazy. I saved it to use it! So, I was not using any of it because a guy on KZfaq has made a convincing argument that paying taxes is basically evil and, well, stupid if you do it. I drank the Koolaid and would not touch my qualified retirement savings accounts thus denying me of many things I could have enjoyed. I finally wised up and now pay taxes on the money I pull out but enjoy the rest of it. Here is the deal; if you don't pay taxes on you qualified money you will never get to enjoy what is left after taxes. Duh! The same type of thing in regard to this IRMMA, income tax rate and Roth conversions. I want to convert my IRA money to Roth over 5 years so my heirs do not have to deal with paying taxes on it after my death. Yes, I don't want to be stupid about it but worrying and predicting the IRMMA levels and trying to go right up to the limits without going over is all too much for me. Besides, how does one know (until it is too late for a Roth conversion) what your Capital Gains will be? Or, in my case what my natural gas royalties will be for the year (the go up and down drastically from month to month). I could go insane trying to predict all of this stuff and then lie awake at night wondering if my predictions are accurate. Oh, hire a professional to figure all this out you say. Well you just increased your cost (or tax if you will) of using your money. It is what it is. The Feds have likely made all of these calculations so convoluted and overly complicated so the average Joe cannot possibly understand it. Just look at our crazy Income Tax code. How hard would it be to have a flat tax rate for different income brackets----no deductions?

My thoughts exactly! Live your life. This is a small fee in the whole scheme of things. Also, the NewRetirement software does this entire calc and estimation for you. Way too much to deal with in manual spreadsheets. I retired from my IT career for a reason! 😄

Abbott: “I’m telling you, ‘Who’s on First, What’s on Second, I don’t know is on Third; Costello: “Tell me the Pitcher’s Name (the IRMAA Brackets) . . . Abbott: “Tomorrow” (in Two Years) . . . Costello: “Another guy gets up and it’s a long ball (a lot of MAGI) to center Abbott: “Because (how much over the IRMAA limit) Costello: “Why? I don’t know, and I don’t care” Abbott: “What was that?“ Costello: “I said, ‘I DON’T CARE!” Abbott: “Oh, that’s our shortstop (the bureaucrats and the IRS)”

@@tulsatom4307 awesome 👏

@@jamesy4003 Actually, I DO Care I just don’t know (First Base) what $ to use in 2023 Roth Conversions yet for my 2025 IRMAA Limit

Babetbabet😊

Ouch, that’s nasty.

Yes, great resource!

I was advised by Social Security while arranging to claim my benefit at age 70, that when I plan to stop doing ROTH conversions, I could argue for this being a life changing event. She said it would most likely be rejected when I file my Form SSA-44, since it isn't a reduction of "earned" income but that I should then appeal that decision. I was surprised to get that advice. We'll see if it works.

In another earlier video he mentioned that you should not hold mutual funds outside of a 401K or Roth IRA for the reason you mentioned. I had two left and got rid of them this year converting them to similar ETF funds. EFTs don't have this behavior.

Why are you using a tax inefficient mutual fund for your non-IRA (cash brokerage) investments? You should be using an ETF or non-dividend paying stocks (which are tax efficient) for that bucket.

One of my points exactly!

By pure unluck, I got hit with IRMAA twice, before I knew she existed. Congrats.

The same thing happened to me - the IRMAA is expected.. 2022 tax return - I am going to watch the the IRMAA bracket (second zone and pay 1.4 times the standard figure) while going into the 24% tax bracket, knowing that it is the marginal rate anyway

Yes, but remember the IRMAA brackets are torpedos. The tax brackets are not. So, if you have to decide which bracket to go over, I would choose going over the tax bracket because the higher tax will apply only to your income that is over the starting bracket amount.

@@cjimcookthe important breakpoints are the IRMAA thresholds, based on your MAGI. Focus on these as your targets. They are grouped, for the most part, inside the 24% bracket. The difference between 22% and 24% is not that great. The IRMAA surcharges are unpleasant, painful and will easily trap those focused solely on hitting income-tax brackets. It’s often not easy to project year-end cap gains or interest income from mutual funds. And unfair too. Does your auto insurance company charge according to your income .."….or your risk factors and driving history？Anyway, those beyond 65 will do well to focus on MAGI. Good luck!

This baffled me for so long, too, Myles. I finally found a source that explained that the 15% non-taxable portion of your gross social security benefit is not a DEDUCTION, as you refer to it above, but rather an EXCLUSION from income. And, for that reason, it is not included in either the standard AGI or the IRMAA MAGI calc of specific concern here. Hope this helps.

It is on one bill for me. I am not taking Social Security yet. The bill is for the Original Medicare premium + Part B IRMAA + Part D IRMAA. I receive the Part B premium from my secondary provider in a separate bill. I paid an annual one time payment for the Part D standard premium so I wouldn't have to deal with them on a monthly basis.

@@emiller7040 That would appear to imply you can pay your premium annually at the January rate and avoid the monthly inflation adjustment over the next year.

They get bonuses for each suicide they cause.

@@_-Karl-_ thanks! I was able to download the info. Think I may create a spreadsheet with this info and see what I can make if it.

Yes, tax-exempt income from municipal bonds is added to AGI.

Wow, I see what you mean, my comment keeps being deleted. Apparently they don't like you to post websites in comments.

Yes, Thank you both. I just didn't understand his comment about the Standard Deduction, because it really has nothing to do with determining MAGI. I found the medicareresources to be an excellent go-to site for this topic. They explain the calculations for the many different MAGI's depending on what government benefit you are interested in. So yes, for most people MAGI will equal AGI. And having tax free income would be the most likely income some might have to add back to AGI to determine MAGI. And Like you mentioned, the other items that may be needed to add back are rare for most people. The good thing is, the method of calculating MAGI for the purpose of medicare premiums is the most simple of all the MAGI's. What I can't understand is why virtually all the videos I've seen will only gloss over what determines your MAGI. Most are Wrong, or incomplete at best. Without knowing your MAGI, the rest of the presentation is moot.

Two months of actual inflation index values + 10 months of the zero inflation assumption.

If you have two month's CPI-U numbers, say they are A and B and there is no inflation, then you'll have A followed by 11 B's, so the average for the twelve month period is (A + 11 * B) / 12. I'm not sure you would need to account for deflation in the estimate, in which case CPI-U numbers would decrease.

@@tomgradel4999 Thank you, I was guessing that was the case, but wanted to see an actual calculation like in 2023 number to confirm. So assuming no deflation for remaining months, the 2024 single filer would have a a minimum IRMAA threshold of $102K or $204K for MFJ. But assuming there is continued inflation, 2024 numbers would most likely be even higher, correct? Thanks, again.

@@voyagerman22 I agree with your $204K MFJ number provided inflation doesn't go down as it did in 2008. I'm personally using $200K for this years conservative estimate for MAGI when planning for Roth conversions.

Annually, it is a rolling 2 year look back

Only $200k if you’re single. No inflation adjustment either. Plus your Roth conversion makes more of your taxable investments subject to the 15% or 20% long-term gains zone (plus 3.8% NIIT as you note). Yes, it’s obnoxious. I liked most of what Trump did but I hate NIIT, especially the lack of inflation indexing. Will likely get worse in 2026 when the current tax brackets sunset.

@@headlibrarian1996 Great points! I agree that 2026 could change things so I am trying to take advantage now. A Roth IRA is also a nice thing to pass down in your estate. Inherited regular IRA's could create tax issues for the beneficiaries. Thanks very much.

Per a very lengthy thread in Boglehead, it can go down. I'm going to plan with $96,000 for 2022, even though 2021 was $97,000. I've been hit with IRMAA twice, and I'm determined to not get hit again.

@@larryjones9773 I agree, I am also keeping a little safety margin into my conversions. My investments did much better than I had planned so I am over the line for the first threshold so I am doing more conversions to filled up the bracket, but not too full.

@@everetteborr I looked at annual inflation data for the last 50 years and there are a few years with negative inflation. It's only a matter of time until prices drop down a little. It's rare, but we have no good way to predict when that's going to happen, thus, with IRMAA, we have no choice but to assume the IRMAA brackets will drop lower. Otherwise, we run the risk of higher medicare premiums. This seems the prudent thing to do. Our Roth conversions will be $1,000 to $3,000 less, but that's a small price to pay for the peace of mind (of avoiding higher medicare premiums). Thanks for bringing up this issue.

@@larryjones9773 In the top of the first bracket, I am putting a $5,000 buffer because the second bracket IRMAA costs go up substantially. Jack Bogle used to say that successful investing is a nice problem to have so I am not complaining about IRMAA. I made conversions along the way, but the market was extraordinary between 2010 and 2020, and I am caught in the first bracket. Hopefully, these conversions will keep me out of higher brackets in the future. Best wishes to you, and thank you for your thoughtful comments and observations.

There is zero aggressive inflation fighting.

You are correct.

@@larryjones9773 Thank you!

Yes, that is how it works. Your 2026 Medicare premiums with or without IRMAA will be based on your lower 2024 income in your example. Remember, If you do any Roth conversions in 2024 it will count towards MAGI and possible cause you to enter an IRMAA zone.

@@_-Karl-_ Thanks so much! I will review the info you sent me. Regarding the exception, I can use the single life table but I assume I don't have to empty the accounts within 10 years. "If the original account owner died on or after January 1, 2020, in most cases you will need to fully distribute your account within 10 years following the death of the original owner. However, there are exceptions if you are considered an eligible designated beneficiary. Eligible designated beneficiaries include a minor child of the original account owner, a disabled or chronically ill individual, or any other person who is not more than 10 years younger than the deceased account holder. If you are an eligible designated beneficiary, you can still withdraw RMDs based on your age." Have I interpreted that rule correctly?

@@_-Karl-_ Thanks again. I found the calculator on Schwab's website & it worked perfectly. I do have to take an RMD from the inherited Roth IRA according to them, but the earnings will be non-taxable because the 5 year holding period was met. I have several years to go before I have to pull from my own IRAs, thank goodness!

No, Obama pushed the IRMAA gouging. Clearly “government’s” fault.

Thanks for the question. If you were planning for this year, you use the 2025 IRMAA levels and the income you showed this year would affect what you pay in 2025 for Medicare. The two year look back forces us to look two years into the future. 2021 income would be used to determine what IRMAA you owed this year.