If you are a senior paying Medicare premiums and you are considering doing a Roth conversion, you need to be aware that a large conversion can result in dramatically higher Medicare Part B premiums. That is because Medicare Part B premiums vary according to your income. Retirees with higher incomes pay higher Medicare premiums than people with lower incomes.
The higher Medicare premiums are imposed on single filers who have an Adjusted Gross Income (AGI) of $85,000 and married filers with an AGI greater than $170,000. The premiums reach their maximum for single filers with AGIs over $214,000 and married filers with AGIs over $428,000.
Those may sound like relatively high income limits but if you are single and convert a $200,000 IRA this year, you could see a huge increase in your Medicare premiums. It is possible for Medicare premiums to increase by as much as $3,000 a year. A married couple could see increases of $6,000 per year.
Finally, remember that a Roth conversion can also have the negative impact of increasing the amount of your Social Security benefits that are taxable.
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