IRMAA · Mesa County · Colorado's Western Slope

Do IRA or 401(k) Withdrawals Count Toward IRMAA in 2026?

The withdrawal counts. The rollover does not. The Roth usually does not. Here is how the IRS sorts the money that leaves a retirement account, which lines of your 1040 Social Security actually reads, and what a $40,000 IRA withdrawal in Mesa County costs two years later.

Medicare On Main Data Desk

Published October 5, 2026 · 9 min read · Reviewed by Brian Penner

The question arrives in two versions. The first is from someone who is 66, retired, and wants to pull $40,000 out of an IRA for a truck, a roof or a daughter's down payment, and has heard that it might raise their Medicare premium. The second is from someone who just retired, rolled a 401(k) worth several hundred thousand dollars into an IRA, got a 1099-R in January with that whole number printed in box 1, and is now afraid their Part B premium is about to triple. The first person is right to ask. The second person can relax, as long as the rollover was done correctly. This article is the sorting rule for both, with the IRS language that backs each line, and the 2026 table that turns the answer into dollars.

What Social Security actually reads

Medicare's income-related monthly adjustment amount, IRMAA, is not based on "income" in the everyday sense. The regulation defines it precisely: "Modified adjusted gross income is your adjusted gross income as defined by the Internal Revenue Code, plus the following forms of tax-exempt income: (i) Tax-exempt interest income; (ii) Income from United States savings bonds used to pay higher education tuition and fees; (iii) Foreign earned income; (iv) Income derived from sources within Guam, American Samoa, or the Northern Mariana Islands; and (v) Income from sources within Puerto Rico" (20 CFR § 418.1010(b)(6)).

Read that list again, because it answers the question. Retirement-account withdrawals are not one of the five add-backs. They count toward IRMAA only to the extent they are already inside adjusted gross income, which means the only thing that matters is what your tax return puts on line 4b (IRA distributions, taxable amount) and line 5b (pensions and annuities, taxable amount). Line 4a and line 5a, the gross amounts, are not read at all. So the whole exercise is figuring out which retirement-account transactions produce a number on 4b or 5b, and which produce a number only on 4a or 5a. The table below does that for the ten moves we see most often in Grand Junction.

Ten things that come out of a retirement account, sorted

Sources: IRS Pub. 590-B · IRS Pub. 575 · IRS Topic 413 · Form 1099-R instructions · 20 CFR § 418.1010. Line numbers are from Form 1040; the 1040-SR uses the same numbering. Roth conversions and qualified charitable distributions each have their own post, linked in the rows.

The withdrawal: why it counts in full

For most people the IRA or 401(k) was funded entirely with pre-tax money, and the IRS is direct about what that means on the way out: "If only deductible contributions were made to your traditional IRA (or IRAs, if you have more than one), you have no basis in your IRA. Because you have no basis in your IRA, any distributions are fully taxable when received," and "Distributions from traditional IRAs that you include in income are taxed as ordinary income" (Pub. 590-B). The reporting instruction follows: "Report fully taxable distributions, including early distributions, on Form 1040, 1040-SR, or 1040-NR, line 4b." Employer-plan money works the same way on line 5b. There is no capital-gains treatment, no exclusion, no averaging. The whole withdrawal is income in the year the check is cut, and the whole withdrawal is inside the MAGI Social Security reads two years later.

Two refinements. If you ever made nondeductible contributions to a traditional IRA, you have basis, and "only the part of the distribution that represents nondeductible contributions and rolled over after-tax amounts (your cost basis) is tax free." Form 8606 does the pro-rating, across every traditional IRA you own, and only the taxable remainder reaches 4b. And if you are under 59½, the IRS adds its own penalty on top of the income tax: "Individuals must pay an additional 10% early withdrawal tax unless an exception applies" (IRS). The penalty is a tax, not income, so it does not itself raise MAGI; the withdrawal that triggered it does.

The rollover: why the big 1099-R does not count

This is the one that sends people to our office in February. You retired from the hospital, the county, the college or an energy company; you moved the 401(k) or 403(b) to an IRA; and the plan mailed a Form 1099-R with the entire balance in box 1. The IRS rule: "A rollover occurs when you withdraw cash or other assets from one eligible retirement plan and contribute all or part of it, within 60 days, to another eligible retirement plan. This rollover transaction isn't taxable (unless the rollover is to a Roth IRA or a designated Roth account from another type of plan or account), but it is reportable on your federal tax return" (Topic 413).

"Reportable" is why the 1099-R exists; "isn't taxable" is why it does not matter for Medicare. For a direct rollover the plan is told to "enter -0- (zero) in box 2a" and to use distribution code G (1099-R instructions). On your return the gross amount goes on line 5a, the taxable amount on 5b is zero, and Social Security sees nothing. A trustee-to-trustee transfer between two IRAs is even quieter: it is not a distribution at all.

The rollover rule has one sharp edge, and it cuts people who take the check themselves. "Any taxable eligible rollover distribution paid to you from an employer-sponsored retirement plan is subject to mandatory income tax withholding (generally at a rate of 20%)," and "You must include the taxable amount of a distribution that you don't roll over in income in the year of the distribution" (Topic 413). So if a $300,000 plan balance is paid to you, the plan sends $60,000 to the IRS and $240,000 to you. Unless you find $60,000 elsewhere and deposit the full $300,000 into the IRA "by the 60th day following the day on which you receive the distribution" (Pub. 575), the $60,000 that was withheld is a taxable distribution, it lands on line 5b, and it counts toward IRMAA. The fix is procedural: ask for a direct rollover, payable to the new custodian, and the 20% never comes out.

The Roth: why qualified withdrawals do not count

A Roth IRA withdrawal is qualified when "it is made after the 5-year period beginning with the first tax year for which a contribution was made to a Roth IRA set up for your benefit" and is "made on or after the date you reach age 59½," or on disability or death (Pub. 590-B). For a Roth 401(k), "if you receive a qualified distribution from a designated Roth account, the distribution isn't included in your gross income. This applies to both your cost in the account and income earned on that account" (Pub. 575). Not in gross income means not in adjusted gross income means not in MAGI. A retired couple drawing $40,000 a year from a Roth has, for Medicare purposes, drawn nothing.

The honest footnote is that the money got into the Roth one of two ways. If it went in as contributions from a paycheck, it was taxed then and is done. If it went in by conversion, the converted amount was ordinary income in the conversion year and counted toward IRMAA for the premium year two years later. The Roth does not erase the IRMAA cost of a withdrawal; it lets you choose the year you pay it and then stop paying it. For a household that expects to be above $218,000 every year once required minimum distributions begin at 73, that trade can be worth making in the lower-income years between retirement and 73. It is a tax-planning decision, and your tax advisor should run it, not us.

The 2026 table the withdrawal lands on

Here is the full 2026 table from CMS's November 14, 2025 fact sheet, read against 2024 returns. The 2027 version applies the same shape to 2025 returns, with the first line already published at $111,000 / $222,000 (Medicare & You 2027, p. 86) and the rest due in November; we track that here.

Source: CMS — 2026 Medicare Parts A & B Premiums and Deductibles / 2026 Part D IRMAA (Nov 14, 2025). Per person, per month. The Part D surcharge is paid to Medicare, not to the plan, and applies to Advantage plans with drug coverage too.

A Mesa County couple, one withdrawal, two years later

Take a retired couple on the Redlands filing jointly: a pension, two Social Security checks, some dividends and interest, for a base 2026 MAGI of $190,000. (That number is an assumption chosen to sit near the first joint line; everything after it is arithmetic on the table above.) In 2026 they take $40,000 out of a traditional IRA to replace a truck.

Arithmetic on the CMS 2026 table; the 2028 premium will use the 2028 table, which is not published, so the dollar figures are the 2026 surcharges used as a stand-in. Part D surcharges assume both spouses have drug coverage.

The same $40,000, the same truck, and the difference between row two and row three is $2,296.80 for one premium year. The couple had $28,000 of room under the $218,000 line; a withdrawal sized to the room, with the rest in January, never crosses it. Notice too what the rule does not care about: withholding. Having the custodian hold back 20% for taxes feels like settling up, and it does settle the income tax, but withholding does not reduce the taxable amount on line 4b by a dollar. The gross withdrawal is what counts.

Notice the second thing the rule does not care about: why you took the money. Social Security's list of life-changing events, the ones that let you file Form SSA-44 and have a lower current-year income used instead, is specific: your spouse dies, you marry, your marriage ends, "you or your spouse stop working or reduce the hours you work," you lose income-producing property through no fault of your own, an employer pension plan is terminated or reorganized, or you receive an employer settlement (20 CFR § 418.1205). A withdrawal you chose to take is not on it. If the couple above had retired in 2026, the retirement would be appealable; the truck would not, and the surcharge for 2028 would stand. The appeal post walks through the form.

What this looks like in Grand Junction

Sources: CMS 2026 fact sheet · CMS Medicare Monthly Enrollment · CDC PLACES, 2023 — via the Medicare On Main Data Desk. The county estimate is 8% of 41,709; Mesa County's income mix may differ from the national one.

Mesa County retires a particular kind of household: a career at St. Mary's, the college, the county or an energy company, a pension or a well-funded 403(b), and a spouse with a rollover IRA of their own. Those households sit closer to the $218,000 line than they guess, and the years between retirement and 73 are when the IRA is the obvious place to reach for a large one-time expense. It is also, per CDC PLACES, a county where 26.6% of adults live with high blood pressure and 8.1% with diabetes, so the Part D surcharge is not theoretical; it rides on a drug plan that is getting used. If there is a Roth, a taxable brokerage account or plain savings to draw from instead, the IRMAA math belongs in the decision about which account pays for the truck. If there is not, the calendar is the lever: a withdrawal split across December and January is two smaller numbers on two returns.

What I would do before taking the money out

1. Find this year's MAGI so far. Adjusted gross income plus tax-exempt interest, projected to December 31. Compare it to $109,000 single / $218,000 joint. The gap is the room you have.
2. Size the withdrawal to the room, or split it across two Decembers. Two years' worth of room is twice the room. January is only a few weeks away from December.
3. Ask whether a Roth or a taxable account can pay instead. A qualified Roth withdrawal adds nothing to MAGI; a brokerage sale adds only the gain, which has its own rules.
4. Moving a 401(k)? Use a direct rollover. Payable to the new custodian, code G, zero in box 2a. Never take the check yourself if you can avoid it; the 20% withholding becomes income unless you replace it within 60 days.
5. At 73 or older, remember the withdrawal is partly mandatory. The required minimum distribution counts and cannot be rolled over; the RMD post covers the April 1 two-distribution trap and qualified charitable distributions.
6. Retired this year too? That part is appealable. File SSA-44 for the stop-work event with your estimate of this year's lower income (SSA); the withdrawal itself is not, so keep the estimate honest and include it.

How we know all this: the Medicare On Main Data Desk frames every article with public data — here, the Social Security regulations defining modified adjusted gross income and life-changing events, IRS Publications 590-B and 575, Tax Topic 413 and the Form 1099-R instructions, CMS's November 14, 2025 fact sheet on 2026 premiums and IRMAA, the 2027 Medicare & You handbook, CMS county enrollment data and CDC PLACES. The worked example is arithmetic on published tables with stated assumptions. IRMAA is set by Social Security from your tax return, not by any plan or agent, and nothing here is tax advice; confirm your figures with SSA, Medicare.gov or a licensed agent, and account-selection and conversion questions with your tax advisor. We take no payment from any carrier to feature a plan.