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

Your 401(k) withdrawals can impact your Medicare premiums. While few households pay Medicare Part A premiums, most households do pay premiums for Medicare Part B and Part D. These premiums are based in significant part on your MAGI (modified adjusted gross income). If your income goes up, your premiums rise in response. However, the good news is that your premiums are recalculated each year, so if your income goes back down, your premiums will, too.

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What Are Medicare Premiums?

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.

2026 Medicare Costs By Part

How Does Income Increase Medicare Premiums?

For Medicare Part B and Part D, premiums are calculated based on a concept called Income-Related Monthly Adjustment Amount (IRMAA). This is the index for how Medicare adjusts your monthly premiums based on your MAGI  from two years prior (for 2026, it’s based on 2024 MAGI).

For Medicare Part D, you pay a monthly premium based on the plan you select. You may then pay an additional surcharge based on your income. 

IRMAA: Medicare Part B and D

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 2026, your premiums would be based on your income from 2024. ¹

This formula uses your Modified Adjusted Gross Income (MAGI), which is your Adjusted Gross Income (AGI) but modified to meet the specific requirements of a given program. In the case of Medicare, an MAGI includes your total adjusted gross income and tax-exempt interest income.. 

For most households, Medicare’s MAGI will be similar, if not identical, to their adjusted gross income. This will include all taxable sources of income, which means your Medicare premiums may be affected by factors such as your taxable Social Security benefits, pre-tax retirement account withdrawals and 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.

Will Withdrawing $110,000 From Your 401(k) Affect Your Premiums?

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 $202.90 to $527.50 per month. It would increase your Part D surcharge from $0 to $60.40.

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 $405.80. It would increase your Part D surcharge from $0 to $37.50.

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 premiums will remain higher. 

A financial advisor can help you build and navigate your personal retirement strategy.

Strategies to Manage Medicare Premium Increases

If you expect to take large withdrawals from your retirement accounts, planning ahead can help you avoid unnecessary hikes in your Medicare premiums. Because IRMAA brackets are based on income, the timing and source of your withdrawals matter.

One common retirement withdrawal strategy is to spread withdrawals over several years rather than taking a large lump sum in a single year. Instead of pulling $110,000 all at once, you take smaller withdrawals over two or three years. This helps keep your MAGI below the next IRMAA threshold, reducing the chance of a sharp jump in premiums.

Using Roth accounts is another way to limit IRMAA exposure. Withdrawals from Roth IRAs and Roth 401(k)s do not count toward your Medicare MAGI, so they do not affect your premiums. Some retirees choose to make Roth conversions before age 65 so that once they are on Medicare, they can draw from Roth accounts without increasing their taxable income.

Lastly, manage the timing of other income events. Social Security benefits, required minimum distributions (RMDs) and investment gains can all add to your MAGI. By staggering withdrawals and spreading out taxable events, you can smooth income from year to year, making it easier to stay under premium thresholds.

How Much Income Tax Will You Owe on the Withdrawal Itself?

Before considering Medicare premiums, you need to account for the federal income tax owed on the $110,000 withdrawal. Traditional 401(k) and IRA withdrawals are taxed as ordinary income in the year you take them, stacking on top of your other taxable income for that year.

Using the same individual example from above, assume you have $75,000 in income from Social Security and portfolio withdrawals. Adding a $110,000 taxable withdrawal could increase your federal income tax by pushing some of your income into higher marginal tax brackets. The exact increase depends on how much of the original $75,000 is taxable, your filing status, deductions and the tax treatment of your portfolio withdrawals.

The additional withdrawal could also cause a larger portion of your Social Security benefits to become taxable. Up to 85% of Social Security benefits can be included in taxable income, although this does not mean the benefits are taxed at an 85% rate. This additional tax effect is separate from any increase in Medicare premiums discussed earlier.

For the married couple example with $200,000 in existing income, adding $110,000 pushes total income to $310,000. Depending on deductions, a significant portion of that withdrawal likely falls in the 24%bracket. Federal tax owed on the withdrawal could be up to $26,000, again separate from any IRMAA impact.

State income tax adds another layer. Many states tax 401(k) withdrawals as ordinary income, similar to federal treatment. If you live in a state with a 5% to 9% income tax rate, add several thousand dollars more to your total tax bill on this single withdrawal.

If you’re withdrawing from an employer-sponsored 401(k) still held with a former employer, the plan administrator is required to withhold 20% automatically for federal taxes. On a $110,000 withdrawal, that means $22,000 is withheld upfront. However, this mandatory withholding often doesn’t match your actual tax liability, particularly if you land in a higher bracket. You may owe additional tax when you file, or you may receive a refund if the withholding exceeded your actual liability.

The combined impact of income tax and Medicare premium increases can total substantially more than either cost alone. For the individual example, $110,000 in ordinary income tax plus the Part B and Part D premium increases could easily exceed $30,000 in additional costs for that year. Before taking a large withdrawal, calculate your total tax exposure, not just the Medicare impact, so you understand the complete financial picture.

Unexpected costs is a major reason people aren’t financially prepared for retirement. Calculate whether you’re on track:

Bottom Line

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. 

Planning for the Medicare Gap

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