| | | | Dear Reader, | One of the most common retirement mistakes isn't chasing a hot stock—it's underestimating how "forced income" can reshape your tax return. When required minimum distributions (RMDs) begin, the government effectively sets a baseline for how much taxable income must show up each year, whether you need the money or not. | That matters because those withdrawals don't land in isolation. They stack on top of Social Security, pensions, and portfolio income—often pushing retirees into higher brackets and higher Medicare premiums than they expected. |
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| | | | | Why This Matters | RMDs are mandatory withdrawals from traditional IRAs and most workplace retirement plans, and the rules are clear: once you reach the required age, you must take them on the IRS timeline under the required minimum distribution rules. | For everyday investors, that requirement creates a "tax stacking" problem. A larger-than-planned RMD can push more of your household income into higher tax brackets—and it can also increase the share of Social Security benefits that becomes taxable. | Then comes the second punch: Medicare. Premium surcharges (IRMAA) are based on income from two years prior, which is why retirees can feel blindsided when a single high-income year triggers higher Part B and Part D costs later. Medicare's own guidance explains that many people pay the standard premium plus an income-related amount when income clears certain thresholds, using a two-year lookback. |
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| | | | | Where Things Stand | In 2026, the standard Medicare Part B premium is higher than last year—the 2026 Part B premium figure makes that plain—so getting bumped into an IRMAA tier costs more than it used to. | This is why retirement distribution taxation deserves to be treated as its own threat vector. The mechanics are simple: RMDs increase taxable income, and taxable income can trigger bracket jumps and Medicare surcharges—sometimes with a lag that makes the cause harder to see. | Conservative planning levers that can help (depending on your situation): | Roth conversions (when appropriate): Gradual conversions in lower-income years can reduce future RMDs and smooth lifetime taxes. Charitable giving via QCDs: If eligible, directing part of an RMD straight to charity can satisfy the requirement while reducing taxable income. Withdrawal sequencing: Coordinating taxable, tax-deferred, and Roth withdrawals can help you "aim" for a bracket instead of drifting into the next one.
| And if your income drops due to a qualifying event, Social Security provides a way to ask for relief—the process to request an IRMAA reduction exists for exactly that scenario. |
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| | | | | The Patriot Perspective | RMDs aren't a market risk—you can't diversify them away. But you can manage the damage by planning distributions deliberately, watching the Medicare lookback, and using conservative tools to keep retirement income steady and predictable. | Stay steady,
The Patriot Investor |
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