For retirees living on Social Security and a 401(k) alone, IRMAA is a manageable concern. For retirees who also collect a pension, rental income, annuity payouts, or deferred compensation, it becomes one of the most consequential planning issues in their retirement. The reason is simple: a pension is a floor of income you can't turn off. Every dollar you withdraw from a 401(k) stacks on top of it. By the time Required Minimum Distributions begin, many pension-holding retirees find themselves permanently parked in higher IRMAA brackets, paying thousands of dollars a year in Medicare surcharges that careful planning a decade earlier would have avoided.

This article goes deeper on how to sequence 401(k) withdrawals around a pension or other fixed income to keep Medicare costs down.

The Core Problem: Stacked Income

Think of your retirement income as a stack. At the bottom sits your Social Security benefit and any pension — these are non-negotiable, fully taxable, and they arrive every month whether you want them or not. On top of that sit required distributions from tax-deferred accounts once you hit age 73. Only at the top do you have any real discretion — the 401(k) withdrawals you initiate yourself, along with brokerage account sales, Roth withdrawals, and HSA distributions.

A retiree with a $60,000 annual pension and $30,000 in taxable Social Security is already at $90,000 in MAGI before touching a 401(k). That's within $19,000 of the $109,000 single-filer IRMAA threshold. A single 401(k) withdrawal of $20,000 for a new roof would put them over. That same withdrawal, if it happens in a Medicare year after the two-year lookback catches up, triggers roughly $1,000 in annual Part B and Part D surcharges, repeated every year the income stays elevated.

The point is that pension-holding retirees have less "headroom" to absorb lumpy expenses from a 401(k) without crossing IRMAA cliffs. That constraint needs to drive the whole withdrawal design.

Step One: Map Your Baseline Income Two Years Out

The most common IRMAA mistake for pension-holding retirees is planning for this year's Medicare premium. You should actually be planning for the premium two years from now, because that's what today's income will determine.

Start with a simple projection. List every guaranteed or near-guaranteed income stream — pension, Social Security, deferred comp payouts, rental income net of expenses, interest from CDs or bonds, taxable dividends from your brokerage account, and if applicable, any spouse's income. This is your MAGI floor. Now look at the 2026 single and joint IRMAA thresholds: $109,000 and $218,000 respectively. The gap between your floor and the nearest threshold is your annual discretionary room for 401(k) withdrawals, Roth conversions, and realized capital gains combined.

If your floor is already above the first IRMAA threshold, the planning changes. Now the question isn't how to stay under the first cliff — it's how to avoid the next one up, and how to use every available tool to keep additional withdrawals from compounding your exposure.

Step Two: Use Your Gap Years Aggressively

The single best planning window for pension-holding retirees is the period between when you stop working and when RMDs begin at age 73. For many people, that's a 7- to 15-year window in which you have the most control over your income you'll ever have in retirement.

If your pension and Social Security together leave room under the IRMAA thresholds, use that room deliberately. Take voluntary 401(k) withdrawals (or better, do Roth conversions) up to the bracket ceiling every year. The income you pull out or convert now reduces the 401(k) balance that will eventually generate RMDs. Smaller future RMDs mean smaller future IRMAA exposure — often for the rest of your life.

This is the opposite of what many retirees instinctively do. The intuitive move is to let the 401(k) grow as long as possible and delay withdrawals until required. For someone with a pension, that strategy often maximizes lifetime IRMAA surcharges. Drawing down earlier, even at the cost of paying some tax now, is frequently the right move.

Step Three: Build a Multi-Bucket Withdrawal Plan

Once you're on Medicare and RMDs have started, the goal shifts to keeping annual MAGI inside your target IRMAA bracket. This is where having multiple account types becomes essential. Pension-holding retirees should plan to end up with four "buckets":

• Tax-deferred (traditional 401(k), IRA, 403(b)) — withdrawals count in full toward MAGI.

• Taxable brokerage — only gains count, and long-term gains are taxed at preferential rates.

• Roth (Roth IRA, Roth 401(k)) — qualified withdrawals don't count toward MAGI at all.

• HSA — qualified medical expense reimbursements (including Medicare premiums themselves) don't count toward MAGI.

Here's how a pension-holding retiree might use these in a single tax year. Imagine a married couple, age 70, with $70,000 from a pension, $40,000 in taxable Social Security, and a need for $120,000 total to live on. Their MAGI floor is already $110,000. To fund the remaining $10,000 in expenses without touching 401(k) money, they can draw from Roth accounts or spend brokerage cash with embedded basis, keeping MAGI well under the $218,000 joint threshold.

Now imagine the same couple needs $60,000 more this year for a big expense. Taking that $60,000 from the 401(k) pushes MAGI to $170,000 — still under the first threshold, fine. But if they needed $120,000 more, the same withdrawal pushes them past the first IRMAA cliff. Pulling half from the 401(k) and half from Roth solves the problem.

The mechanics matter. A retiree without Roth or HSA assets has no "safety valve" when a large expense hits. Building Roth balances in the gap years specifically to serve as that safety valve is one of the most valuable IRMAA-management moves available.

Step Four: Specific Tactics That Work With Pensions

Several tactics have outsized impact for pension-holding retirees specifically.

Partial Roth conversions sized to the bracket ceiling. Instead of converting a lump sum, convert just enough each year to land just under the next IRMAA threshold. For a married couple with a $70,000 pension and $40,000 in Social Security ($110,000 floor), that leaves roughly $108,000 of Roth-conversion room before hitting the $218,000 cliff. Done consistently over 10 years, that can shift over $1 million from tax-deferred to Roth.

Qualified Charitable Distributions for RMDs. Once you're 70½ or older, you can send up to $108,000 (2026 limit, rising to $111,000 single / $222,000 married for QCDs) directly from an IRA to a qualified charity. The distribution satisfies your RMD but doesn't land in MAGI. For charitable retirees with pensions, QCDs are the most efficient single tool available because they essentially convert RMD income into invisible-to-Medicare income. A standard cash charitable contribution doesn't do this — the distribution has to go directly from the IRA to the charity.

Delay Social Security if you have a pension. If your pension already provides a solid income floor, delaying Social Security to 70 serves a double purpose: it permanently increases your benefit by 24%, and it keeps Social Security out of your MAGI during the delay years, giving you more room for Roth conversions.

Bunch big 401(k) withdrawals into one bracket year. If you know you'll cross the first IRMAA threshold anyway for a major expense, take the full withdrawal in one tax year rather than spreading it. One year of surcharge is better than two.

Split expenses across calendar years. For expenses that don't require a single payment — a long trip, a renovation, tuition help for a grandchild — paying half in December and half in January can keep both tax years under a threshold.

Harvest capital losses in high-income years. Every $1,000 of realized losses offsets $1,000 of taxable gains, reducing MAGI dollar-for-dollar up to $3,000 against ordinary income.

Step Five: Use SSA-44 Around Transitions

If your pension or 401(k) withdrawals are expected to drop — for instance, because you're winding down a deferred comp payout that ends in a specific year, or because a spouse's pension stops at their death — don't just accept the next IRMAA bill. File Form SSA-44 with supporting documentation showing the reduced income. The appeal is routinely approved for legitimate life-changing events including retirement, death of a spouse, divorce, or loss of pension income.

The Bottom Line

A pension dramatically narrows the planning window for IRMAA, but it also makes that planning more valuable. A retiree without a pension has room to be casual about a year of higher income; one with a pension often doesn't. The retirees who handle this well tend to start drawing down tax-deferred accounts earlier than intuition suggests, build serious Roth balances in their 60s before Medicare, use QCDs once they qualify, and stay religious about the two-year lookback. The ones who don't plan carefully can easily pay $5,000 to $15,000 a year in avoidable Medicare surcharges for the rest of a 25-year retirement — a six-figure lifetime cost that was entirely preventable.

This article provides general information, not personalized financial or tax advice. Individual withdrawal and conversion strategies should be reviewed with a qualified financial planner or CPA familiar with your specific pension, tax, and Medicare situation.