First $91,000 IRA RMD Doubles 73-Year-Old's Medicare Part B Premium to $405.80

Q: Can a little-known annuity shield $210,000 from the RMD tax bomb and slash your future Medicare premiums?

Yes — a Qualified Longevity Annuity Contract, or QLAC, can legally move up to $210,000 out of the balance used to calculate RMDs, which can reduce taxable withdrawals and, in some cases, lower future Medicare premiums. For someone with a $2.4 million traditional IRA, shifting $210,000 into a QLAC would shrink the account balance used for the RMD formula. At age 73, that could cut the first-year RMD by roughly $7,900 to $8,000, reducing ordinary income in that year. Because Medicare’s IRMAA surcharge uses a two-year lookback, a lower RMD can also reduce Modified Adjusted Gross Income and may help keep income below a premium cliff. But the Medicare benefit is not automatic. In the case described, a roughly $91,000 RMD plus other income is expected to place MAGI around $140,000 to $160,000, above the key $137,000 single-filer IRMAA threshold. A QLAC alone may not be enough to pull income below that line, though it could help if the person is close to a threshold. There are trade-offs. A QLAC is generally irrevocable, the money becomes illiquid, payments must begin by age 85, and those later payments are taxable and could raise IRMAA then. Inflation and insurer credit quality also matter. For this retiree, a QLAC is best viewed as a targeted RMD-reduction tool, not a complete fix. A QCD is often more effective for immediate IRMAA control because it directly lowers MAGI while satisfying the RMD.

2 articles · Updated · 24/7 Wall St. · Jul 16

$91,000 in first required IRA withdrawals can push a 73-year-old single retiree's 2026 income into Medicare's third IRMAA tier, lifting her 2028 Part B premium to $405.80 a month.
That jump comes from Medicare's two-year lookback: with MAGI estimated at $140,000 to $160,000, she crosses the $137,000 threshold and also faces a $37.50 monthly Part D surcharge.
$25,000 sent directly from the IRA to charity through a qualified charitable distribution would still satisfy part of the RMD but stay out of MAGI, potentially dropping her below the IRMAA cutoff.
$40,000 to $70,000 annual Roth conversions beyond the RMD could further shrink future taxable IRA balances, though converting too much in one year risks breaching the next IRMAA tier at $171,000.