IRMAA and Federal Retirees: How TSP Withdrawals Can Raise Your Medicare Premiums
TSP withdrawals can trigger IRMAA and raise your Medicare premiums. Learn how it works and how federal retirees can plan around it.
Quick Summary
Most federal employees spend decades building their TSP (Thrift Savings Plan) balance, and rightfully so. But when retirement arrives and withdrawals begin, that income can trigger a Medicare surcharge called IRMAA that many retirees never see coming. IRMAA, or the Income-Related Monthly Adjustment Amount, increases your Medicare Part B and Part D premiums based on your income from two years prior. For federal retirees drawing from a TSP, a FERS pension, and Social Security, crossing an IRMAA threshold is easier than it sounds, and the added cost can run several hundred dollars per month.
What Is IRMAA?
Medicare's standard Part B premium in 2026 is $185.00 per month. Most beneficiaries pay that rate. But if your income exceeds certain thresholds, Medicare adds a surcharge on top, that's where IRMAA comes into play. The surcharge is based on your Modified Adjusted Gross Income (MAGI) from two years earlier, which means your 2024 income determines your 2026 Medicare premiums. IRMAA applies to both Part B (medical coverage) and Part D (prescription drug coverage).
The surcharge is assessed per person, not per household, which matters for married federal retirees. If both spouses are on Medicare and both cross a threshold, both pay the surcharge.
2026 IRMAA Brackets for Medicare Part B
Individual MAGI (2024) | Married Filing Jointly (2024) | Monthly Part B Premium |
$106,000 or less | $212,000 or less | $185.00 |
$106,001 – $133,000 | $212,001 – $266,000 | $259.00 |
$133,001 – $167,000 | $266,001 – $334,000 | $370.00 |
$167,001 – $200,000 | $334,001 – $400,000 | $480.90 |
$200,001 – $500,000 | $400,001 – $750,000 | $591.90 |
Above $500,000 | Above $750,000 | $623.90 |
Source: Centers for Medicare & Medicaid Services (CMS), 2026 Part B premium schedule.
Why Federal Retirees Are Especially Vulnerable
Federal retirees often have multiple income streams that stack up quickly: a FERS pension, TSP withdrawals, and Social Security. Each of those counts toward MAGI. A retiree receiving a $35,000 annual pension, $20,000 in Social Security, and taking $60,000 from their TSP in a given year could easily land in the third or fourth IRMAA bracket, which means paying $185 to nearly $300 more per month (per person) than the standard rate.
The two-year lookback makes this especially tricky. A large TSP withdrawal taken in 2024, perhaps to pay off a mortgage, fund a home renovation, or cover an unexpected expense, will show up in your 2026 Medicare premiums, long after the money has been spent. Many retirees are caught off guard when their Medicare bill jumps the following year with no clear connection to their current spending.
What Income Counts Toward IRMAA?
MAGI for IRMAA purposes includes: wages, traditional TSP withdrawals, traditional IRA distributions, taxable pension income, Social Security benefits (up to 85%), capital gains, and interest and dividend income. Roth TSP and Roth IRA withdrawals do not count toward MAGI, which is one reason Roth conversions are a planning tool some federal employees consider in the years between retirement and age 65.
How to Appeal an IRMAA Determination
Yes. If your income has dropped significantly since the two-year lookback year due to retirement, a reduction in work hours, divorce, or another life-changing event. then you can request a review using SSA Form SSA-44. Medicare will use your more recent income instead of the prior-year figure. This is worth pursuing if your situation has changed materially, and many federal retirees qualify in their first year on Medicare after leaving full-time employment.
Next Steps
If you're within five years of retirement or already receiving Medicare, it's worth looking at how your expected income sources will interact with the IRMAA brackets each year. Decisions about when and how much to withdraw from your TSP can have a direct effect on your Medicare costs. By planning even one or two years ahead, you can make a meaningful difference. A licensed fiduciary who specializes with federal employees can help you see how your pension, TSP, and Social Security fit together before the costs arrive. Schedule a complimentary consultation here.