I Plan to Withdraw $110k From My 401(k) This Year. Will This Cause My Medicare Premiums to Go Up?

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20-02-2025

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Your 401(k) withdrawals can affect how much you spend on Medicare.
While few households pay premiums for Medicare Part A, most households do pay premiums for Medicare Part B and Part D. These premiums are based in significant part on your taxable household income. If your income goes up, such as by making a withdrawal from a taxable retirement account, your premiums can increase too. The good news is that your premiums are recalculated each year, so if your income goes back down your premiums will too.
For example, say that you plan on withdrawing an additional $110,000 from your 401(k) this year. This would almost certainly cause your Medicare premiums to temporarily increase, but not necessarily right away. Here are some things to know.
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Medicare is a government health care program for Americans age 65 and older. There are four parts to this program, Parts A through D. Each part has a different cost structure:
Medicare Part A: No costs for most households. A flat monthly premium, typically either $285 or $518, for households that do not have enough working credits to qualify for free Medicare.
Medicare Part B: Monthly premiums that range between $185 and $628.90 based on household income.
Medicare Part C: Monthly premiums based on the individual plan that you choose.
Medicare Part D: Monthly premiums based on the individual plan that you choose, with an additional surcharge that ranges from $0 to $85.80 based on your household income.
As with all government programs, these numbers are periodically updated to reflect inflation. These numbers are accurate as of 2025.
Medicare Part A typically has no costs. Medicare Part C is a public-private partnership in which households buy private insurance with Medicare funding. The premiums under this program are based on the individual plan that you select.
Medicare Part B and Part D each have monthly premiums that can increase based on your annual income.
For Part B and Part D, premiums are calculated based on a concept called IRMAA, or "Income-Related Monthly Adjustment Amount." This is the index for how Medicare adjusts your monthly premiums based on your annual taxable income.
In 2025, the IRMAA for Part B is as follows:
Below $106,000 Single/$212,000 Joint: Monthly Premium $185.00
Between $106,001 and $133,000 Single/$212,001 and $266,000 Joint: Monthly Premium $259.00
Between $133,001 and $167,000 Single/$266,001 and $334,000 Joint: Monthly Premium: $370.00
Between $167,001 and $200,000 Single/$334,001 and $400,000 Joint: Monthly Premium: $480.90
Between $200,001 and $500,000 Single/$400,001 and $750,000 Joint: Monthly Premium: $591.90
Above $500,001 Single/$750,000 Joint: Monthly Premium: $628.90
For Medicare Part D, you pay a monthly premium based on the plan you select. You might then pay an additional surcharge based on your income. In 2025, the IRMAA for Part D is as follows:
Below $106,000 Single/$212,000 Joint: Monthly Addition $0
Between $106,001 and $133,000 Single/$212,001 and $266,000 Joint: Monthly Addition $13.70
Between $133,001 and $167,000 Single/$266,001 and $334,000 Joint: Monthly Addition $35.30
Between $167,001 and $200,000 Single/$334,001 and $400,000 Joint: Monthly Addition $57.00
Between $200,001 and $500,000 Single/$400,001 and $750,000 Joint: Monthly Addition $78.60
Above $500,001 Single/$750,000 Joint: Monthly Addition $85.80
The IRMAA is calculated annually based on a two-year lookback, meaning that each year your Medicare premiums are based on your income from two years ago. So, for example, in 2025 your premiums would be based on your taxable income from 2023. In 2026, your premiums would be based on your taxable income from 2024.
This formula uses what's called a "MAGI," or "Modified Adjusted Gross Income." An MAGI is your AGI, or "Adjusted Gross Income," modified by specific requirements of a given program. In the case of Medicare, an MAGI means your basic taxable with tax-exempt interest, some non-taxable Social Security benefits, and some deductions included.
For most households, Medicare's MAGI will be similar, if not identical, to their standard taxable income. This will include all taxable sources of income, so Medicare premiums are affected by factors such as your Social Security benefits, all pre-tax portfolio withdrawals and all taxable portfolio withdrawals. Medicare premiums are not affected by Roth IRA or Roth 401(k) withdrawals.
Consider speaking with a financial advisor for help integrating the elements of your retirement plan.
In a word, yes.
Unless you are at the top of the IRMAA brackets, an additional $110,000 in taxable income will almost always increase your Medicare Part B and Part D premiums. Exactly how much will depend on your underlying income and your marital status.
For example, say that you are an individual with a combined $75,000 income from Social Security benefits and portfolio withdrawals. An additional $110,000 would push your total income to $185,000. This would increase your Medicare Part B premiums from $185 to $480.90 per month. It would increase your Part D surcharge from $0 to $57.
Or, say that you're a married couple with a combined $200,000 income from benefits and portfolio withdrawals. An additional $110,000 would push your total income to $310,000. This would increase your Medicare Part B premiums from $185 to $370. It would increase your Part D surcharge from $0 to $35.30.
The good news here is that, depending on your financial plans, this fluctuation may only be temporary. First, these premium increases will not take effect for two years. If you withdraw this money in 2025, for example, you have until 2027 to save up for those price hikes. Second, if this is a temporary withdrawal then it will be a temporary increase. If you return to your normal rate of withdrawals in 2026, then your premiums will go back down in 2028. However, if you continue to withdraw an additional $110,000 per year from your 401(k), your prices will remain higher.
The right financial advisor can help you build and navigate your personal retirement strategy.
Your Medicare premiums are based on your annual income. This is calculated with a two-year lookback, and if you aren't careful this price hike can surprise you.
Do not forget the things Medicare doesn't cover. There are many healthcare issues, particularly long-term care, that Medicare simply leaves un-covered. As you prepare for retirement, make sure that you look into the kind of gap and long-term care insurance that will pay for this kind of care.
Finding a financial advisor doesn't have to be hard. SmartAsset's free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you're ready to find an advisor who can help you achieve your financial goals, get started now.
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