Client Background
A retired couple with significant retirement assets sought our advice to manage their income efficiently. They were charitably inclined and wanted to support their favorite causes while maintaining financial efficiency.
Challenge
Their required minimum distributions (RMDs) from their IRAs pushed their Modified Adjusted Gross Income (MAGI) above the 2025 threshold of $206,000 for joint filers, triggering Income-Related Monthly Adjustment Amount (IRMAA) surcharges. IRMAA increases Medicare Part B and D premiums based on MAGI from two years prior, significantly raising healthcare costs for higher-income retirees.
Solution
We recommended using Qualified Charitable Distributions (QCDs). QCDs allow individuals over 70½ to transfer up to $105,000 annually (in 2025) from their IRAs directly to a qualified charity. These distributions count toward RMDs but are excluded from MAGI, lowering their taxable income. By directing a portion of their RMDs to charities via QCDs, we kept their MAGI below the IRMAA threshold, reducing their Medicare premiums.
Results
The couple maintained their charitable giving while significantly reducing their Medicare premiums, saving thousands annually. Their MAGI remained below the IRMAA threshold, ensuring cost-efficient healthcare coverage. This strategy aligned their philanthropy with tax efficiency, preserving more wealth for their future needs.
Are your RMDs increasing your Medicare costs? Contact Michael Brady for a personalized consultation to discuss how your wealth can align with purpose and possibility.