First RMDs Could Spike Taxes and Medicare Costs for Retirees in 2026
Retirees facing their first Required Minimum Distribution (RMD) this year could see unexpected rises in both tax bills and Medicare costs. The deadline for taking an RMD is December 31, but delaying it risks doubling the tax hit in 2027. Meanwhile, higher income from these withdrawals may trigger surcharges on Medicare Part B and Part D premiums the following year.
Anyone turning 73 in 2026 must take their first RMD by December 31 to avoid penalties. Postponing it until April 1, 2027, would require taking two RMDs in that year, potentially pushing taxable income much higher.
The issue stems from income-related monthly adjustment amounts (IRMAAs), which increase Medicare Part B and Part D premiums based on income. These adjustments are calculated using Modified Adjusted Gross Income (MAGI) from two years prior. For 2026, the thresholds start at $109,000 for single filers and $218,000 for joint filers, with surcharges ranging from $81.20 to $487 for Part B and $14.50 to $91 for Part D.
To reduce the risk of higher IRMAAs, retirees can lower their taxable income. Strategies include selling underperforming investments to offset gains or making qualified charitable distributions (QCDs). QCDs satisfy RMD requirements without increasing taxable income, helping avoid potential Medicare surcharges.
The timing of RMDs directly affects both tax bills and future Medicare costs. Retirees must weigh the benefits of taking distributions now versus delaying them. Proper planning, such as using QCDs or tax-loss harvesting, can help manage income levels and limit unexpected premium increases.
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