At 75, a $1.9 million portfolio and a mandatory IRS withdrawal create a collision course with Medicare surcharges that can cost thousands a year, and the order you tap your accounts determines whether you walk away unscathed.<\/p>\n
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A $1.9 million portfolio at 75 is comfortable until the required minimum distribution (RMD) hits. RMDs are the amount the IRS forces you to withdraw each year from pre-tax retirement accounts. At 75, that distribution can push modified adjusted gross income (MAGI) across an Income-Related Monthly Adjustment Amount (IRMAA) threshold<\/a>, which raises Medicare Part B and Part D premiums. The order in which you draw from taxable, tax-deferred, and Roth buckets determines whether that happens.<\/p>\n How the IRMAA Cliff Works<\/p>\n IRMAA works like a cliff, not a gentle slope. Go one dollar over a bracket, and you pay the full surcharge for the entire year. For 2026, a single filer with MAGI at or below $109,000 pays the standard Part B premium<\/a> of about $203. Cross into the next tier, and that monthly bill jumps to roughly $284, with a $15 Part D adjustment tacked on. At the top end, MAGI of $500,000 or more for singles, or $750,000 for joint filers, pushes the Part B premium to about $690 a month.<\/p>\n The two-year lookback<\/a> complicates planning. The Social Security Administration uses the tax return from two years prior to set today\u2019s premium. A Roth conversion or large capital gain taken this year appears in Medicare premiums two years later. That lag is why you must plan sequencing decisions before RMDs begin.<\/p>\n Withdrawal Order That Manages MAGI<\/p>\n The standard framework at 75 assumes three buckets: a taxable brokerage account, a traditional IRA or 401(k), and Roth accounts. RMDs are mandatory from the traditional side. Everything else is discretionary.<\/p>\n Take the RMD first. As Suze Orman put it, \u201cWhether you take RMDs or you give them away through a QCD, you have to do that before you can convert.\u201d The distribution is not optional. What you control is what you layer on top of it. QCDs, Conversions, and Asset Location<\/p>\n A qualified charitable distribution (QCD)<\/a> sends money directly from an IRA to a qualified charity. It satisfies the RMD but never enters adjusted gross income (AGI). For a charitably inclined retiree, this is the cleanest IRMAA tool available.<\/p>\n Roth conversions<\/a> work best in years before RMDs begin, when taxable income is lowest. Clark Howard\u2019s guest advisor outlined a listener plan to convert $90,000 while staying inside the 24% bracket, using the earlier window to shrink the future RMD base. For 2026, the 24% bracket runs to $105,700 for singles and $211,400 for joint filers, and the standard deduction is $16,100 for singles and $32,200 for joint filers. At 75, the conversion window is narrower, but partial conversions still lower future RMDs.<\/p>\n Where you hold your assets matters just as much as what you hold. High-yield investments that throw off ordinary income belong in the IRA, where they can grow tax-deferred. Growth stocks with low current yield are better off in the Roth or a taxable account, since their gains will either escape tax entirely or be taxed at the more favorable capital gains rates.<\/p>\n When Paying the Surcharge Is Right<\/p>\n Avoiding IRMAA is not always the goal. Paying a surcharge on a larger, better-diversified portfolio can beat contorting a withdrawal plan around brackets. A recent 24\/7 Wall St. analysis found that $122,000 in 401(k) withdrawals can layer on roughly $42,000 in IRMAA surcharges, but that math only justifies action when the alternative preserves the same after-tax outcome (we cataloged IRMAA and the other premium traps retirees miss in a free Medicare guide<\/a>). If a life-changing event such as retirement, loss of a spouse, or work stoppage reduces income, Form SSA-44<\/a> lets you appeal the surcharge based on current income rather than the two-year-old return.<\/p>\n What to Do Next<\/p>\n Pull your projected 2026 MAGI and compare it against the $109,000 single and $218,000 joint thresholds. Every subsequent decision follows from how much headroom you have.
\nFund the rest of the spending from taxable accounts. Long-term capital gains and qualified dividends are taxed at preferential rates, and only the gain portion of a sale counts as income. With the 10-Year Treasury yield near 5% and the federal funds upper bound near 4%, short taxable bonds and T-bills can service annual spending without adding a full dollar of ordinary income for each dollar withdrawn.
\nUse Roth withdrawals as the MAGI safety valve. Roth distributions are not counted in MAGI. If a lumpy expense would push you over an IRMAA bracket, a Roth withdrawal covers it without triggering the cliff.<\/p>\n
\nIf you give to charity, route this year\u2019s RMD through a QCD before writing a check from a taxable account.
\nModel a Roth withdrawal as your year-end MAGI safety valve. Also plan for the 2027 Social Security COLA<\/a> tracking near 3.1%, which will lift benefit income and MAGI at the same time.<\/p>\n