How does Medicare IRMAA bracket management work?
Roth conversions focused on particular Medicare IRMAA brackets can be utilized in order to avoid paying additional part B and D premiums.
Last published on: October 31, 2025
Video: Introduction to IRMAA Bracket Management in Tax Lab
Video Transcript
we're really pleased to announce the
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addition of Irma bracket management to
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tax lab in income lab Irma is an
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additional amount paid for Medicare
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Parts B and D premiums based on the
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amount of uh modified adjustable gross
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income somebody has so now in tax lab in
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the list of strategies you will have not
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only
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prata tax ordering like taxable tax
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deferred taxfree Roth conversions to
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ordinary brackets like 10% 12% and so on
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but also Roth conversions that fill up
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to a particular Irma bracket um one
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thing to note here is Roth conversions
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to Irma bracket one will get you just up
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to one but it won't put you into Irma um
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bracket two will fill up bracket one and
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so on um you'll also see an additional
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option here of maximum Roth conversion
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so this will um Force the plan to
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convert as much as it possibly can in
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any given year you can put restrictions
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on what years those are allowed put
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floors on it um exclude particular IAS
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from Roth conversions and so on but it
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will do a maximum Roth conversion within
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whatever constraints you put on it but
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back to Irma brackets for example what I
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see here is between rash conversion to a
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12% bracket so filling up sorry 20 2 2%
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bracket filling up a 22% bracket and 24
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there are actually three Irma brackets
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and you can see how um they kind of get
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lower and lower as we approach um 20 uh
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24% bracket so somebody might say yeah I
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mean I can see how going all the way to
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24 might be really helpful um and in
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this case it looks like the numbers are
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best that won't be true for every plan
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but maybe I actually want to do a little
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less and I just want to fill up my
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bracket two get all the way up to
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bracket three
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and when I do that I can now check how
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it works by this additional graph on the
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right the Irma bracket graph which is um
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total income all lumped into one you can
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see the no Irma bracket uh so there's a
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long section where there is no Irma this
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by the way is total income not Magi so
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it'll include things like Roth
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distributions return of principle from
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taxable account things like that so
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things that wouldn't even show up in an
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Magi um but you'll notice that the uh
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the Irma brackets are they are Mai
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brackets and you can see how here we've
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done just enough Roth conversion 226,000
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um to to get us up to to fill up Irma
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bracket
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2 in a plan
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itself you can go to the advanced
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settings and the taxes section and if
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you've chosen bracket management Roth
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conversions you'll now see those Irma
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brackets as options as well as the
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maximum
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option so I hope you enjoy this new
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feature
Premiums for Medicare parts B (medical insurance) and D (prescription insurance) depend in part on an individual or couple's income. Higher income can mean higher premiums. The additional premium amount is called the "Income-related monthly adjustment amount" (IRMAA). For example, in 2025, Medicare part B premiums have the following schedule, based on modified adjusted gross income (MAGI). MAGI is adjusted gross income (AGI; form 1040 line 11) plus tax-exempt interest.
| IRMAA Bracket | MAGI above (single) | MAGI above (joint) | Monthly Premium |
|---|---|---|---|
| No IRMAA | $0 | $0 | $185 |
| IRMAA 1 | $106,000 | $212,000 | $259 |
| IRMAA 2 | $133,000 | $266,000 | $370 |
| IRMAA 3 | $167,000 | $334,000 | $480.90 |
| IRMAA 4 | $200,000 | $400,000 | $591.90 |
| IRMAA 5 | $499,999 | $749,999 | $628.90 |
While everyone who has Medicare Part B and/or D will pay the base premium rate ($185/month in 2025), only those whose MAGI exceeds IRMAA bracket thresholds will pay additional amounts. To further complicate things, the MAGI used to calculate IRMAA is based on a two-year lookback. So, IRMAA for 2025 is based on MAGI from 2023. (In certain situations involving life changes, a Medicare recipient can request a reevaluation of MAGI and IRMAA using Form SSA-44, but this is not available in all situations.)
Since Income Lab does not know Medicare MAGI from past years, when you create a plan, the software uses the current year's MAGI in the first three years of the plan. Thereafter, it uses a two-year lookback (e.g., year 4's IRMAA is based on year 2's MAGI).
IRMAA amounts are not trivial. A couple who finds themselves in the IRMAA bracket 5 pays over $11,000/year more in Part B premiums (and even more if Part D premiums are included) than someone who pays no IRMAA. Therefore, managing MAGI to control IRMAA can add meaningful value to a retirement plan. Because of this, Income Lab allows plans to target IRMAA brackets for Roth conversions.
You will find IRMAA brackets in Tax Lab and in a plan's tax distribution strategy (using the three-dot menu and selecting Advanced Settings).
Tax Lab
In Tax Lab, you will see IRMAA bracket management strategies in the Strategies dropdown menu or under View Strategies, where IRMAA brackets are interleaved between ordinary income tax brackets.
You can see how total income fills up the IRMAA brackets in the Explore > Income tax bracket graph.
In the IRMAA Brackets graph, we see how total income, including the (purple) Roth conversions, combines to fill up IRMAA bracket 1. This will mean that, two years later, the taxpayers do not pay increased IRMAA bracket 2 premiums. By keeping Roth conversions low enough to avoid that IRMAA bracket, these clients may keep their total taxes (including IRMAA) at a more optimal level.
Tax Lab automatically creates scenarios targeting all IRMAA and ordinary income tax brackets (as well as a "maximum conversion" strategy) and allows you to explore each scenario in order to find one that works best for the particular client situation.
Note that these graphs show total income, which includes all income for the plan for a given year, including income that is not counted as AGI (adjusted gross income), MAGI (modified adjusted gross income (MAGI), or taxable income. Therefore, the 0% ordinary and long-term capital gains tax brackets, and the "No IRMAA" IRMAA bracket will be larger than AGI, MAGI, or taxable income brackets would be. That's because these lowest brackets include things like untaxed Roth distributions, qualified charitable distributions, qualified HSA distributions, and return of principal distributions from taxable accounts.