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Safe Money Radio with Brad Pistole
Safe Money Radio host Brad Pistole is a nationally recognized Financial Professional who specializes in planning that protects principal from stock market volatility and creates guaranteed lifetime income. Listen here to receive insights from Brad and hear what he has to say regarding retirement income planning.
Safe Money Radio with Brad Pistole
How Medicare's IRMAA Can Erode Your Social Security Benefit feat. Paul Morrison
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IRMAA isn’t a headline; it’s a hidden drain on retirement income that too many people meet for the first time in a letter. We sit down with our friend and IRMAA specialist Paul Morrison to expose how Medicare’s income-related monthly adjustment amounts work, why the two‑year tax return lookback catches people off guard, and what to do before you cross the line. From the SECURE Act’s inherited IRA rules to the surge of “unretiring” workers, the pressures pushing retirees into higher surcharges are rising fast—and often avoidable with the right plan.
We break down what actually counts toward IRMAA: RMDs, wages, rental income, dividends, capital gains, pension income, and even interest on municipal bonds. Then we map the flipside—what doesn’t count—so you can build flexibility into your plan. Roth conversions (especially before age 63) reduce future RMDs and keep taxable income lower, which can also reduce the portion of Social Security that’s taxed. Properly designed cash value life insurance can provide tax‑free access to funds in high‑income years without pushing you into a new bracket. We also talk through premium inflation, how Part B and D surcharges compound over time, and why staying in higher IRMAA tiers for years can shrink a Social Security check to almost nothing.
This is a practical, step‑by‑step conversation designed to help you see the road ahead. We share a real IRMAA letter, discuss one‑time events that trigger big bills, and outline how to smooth income so surprises don’t show up two years later. If you’re 55 and up, the best time to start modeling taxes and Medicare costs is now. Map your income sources, plan conversions, and choose when to realize gains so you control the brackets rather than letting the brackets control you.
Ready to protect your Social Security and lower future Medicare premiums? Subscribe, share this episode with someone who needs it, and leave a review with your top IRMAA question so we can cover it on a future show.
To learn more about Brad Pistole and the Ozark Retirement Group, please visit www.ozarksretirement.com
Meet Brad And Paul
SPEAKER_00Welcome to State Money Radio with your host, Brad Pistol. Brad is a retirement income and tax planning certified professional, primarily serving clients in the Midwest, but he's sought after nationally for his expertise in helping people secure their retirement. Mr. Pistol is a licensed life insurance professional in approximately 20 different states, and he specializes in working with people who are near retirement and those who have already retired with wealth management, income planning, and asset protection strategies using life, health, long-term care, and annuity insurance products. And now, here to talk with you about securing your retirement, it's your host, Brad Pistol.
SPEAKER_04Well, hello, everyone. Thank you so much for joining us again today for Safe Money Radio. You know, I love it when we have guests on the show, and we try to have guests on the show about half the time throughout the year. So about 25 weeks of the year, we're going to have someone on, and today is a reoccurring guest, my good friend Paul Morrison. Paul, thank you for joining us today.
SPEAKER_02Brad, always a pleasure. It is the gift that keeps on giving.
Why IRMAA Surged Into Focus
SPEAKER_04Well, you know, I'll tell you, you're famous or you help make me famous. I don't know which one of the two, maybe both. But, you know, we had a video that went viral a year ago, two years ago, almost a half a million views because of the topic that we're going to talk about today. So if you've never heard Paul before, he's been on the show probably five, six times. He's one of our longest returning guests on the show. And so I want to do this because today we're going to be talking about one of my favorite topics, and it's something I never talked about until about three years ago. We're going to be talking about Irma. And so, what in the world is Irma? What's Paul's background with it? We're going to get into that. But Paul, I want to start by saying this. You know, I think back through my Ed slot days. I've been a part of some of the greatest organizations in the world, I think. And so this is my 16th year with Ed Slot. We're always talking about the most cutting-edge tax planning, income planning stuff there is. And I can't personally remember ever talking about Irma until about three years ago. Like we just it never got brought up. If it did, it wasn't on my radar at all. And I never heard it talked about on radio programs or television. And then I met you. We start talking about it. And I'm like, Irma, what's Irma? Why isn't this in any of the stuff we're talking about? And then I say three years ago, it wasn't on radar. Two years ago, it starts getting talked about everywhere. I start promoting it. We start doing videos. Then now you cannot turn on a television or a financial radio show or a television show. It's everywhere. Everyone's talking about Irma. Uh, I think Heather Schreiber and I kind of coined the phrase Aunt Irma. We started talking about mean old Aunt Irma, and now I hear every variation under the sun of it. People are saying mean, old, ugly, fat, disgusting, you know, Aunt Irma. They've all poke off and on. And it's everywhere. So as we start with this introduction, all of our listeners, maybe they're hearing it for the first time. So tell us about your background and about Irma and about what it is that you do.
Defining IRMAA And The Shadow Tax
SPEAKER_02So I've been in the Irma game for probably about three years now. It all started in December of 2021 with an article from the investment news, the great Mary Beth Franklin, right? We all have, you know, just an unbelievable amount of respect for. But she came out with an article saying that Medicare Part B premiums at that time were just coming off COVID, you know, 2020, so inflation was very high. But these premiums were spiking to, I think it was around maybe 17%. And the cola at that time, believe it or not, was going to be 5%. So 17%, 5%. My my sons take basic math, so 17% is greater than five, right? I I hope so. So, you know, that article really um attracted my interest. And it allowed me to really give an overall uh perspective of the financial planning industry on the knowledge of Irma. Surprisingly, uh there was a great, I use the word great lack of understanding knowledge of the subject matter of Irma. So that actually led me to one step further is collaborating with some of the experts of Irma in our industry over the years and create a designation. And the designation was for uh financial professionals to really have educational conversations about Irma and the shadow tax it represents in retirement, but also um to you know be the IRMA specialist in your community. So what's that mean? Being a specialist with Irma appeals, understanding the future cost of Medicare premiums and the increase in premium increase in inflationary uh increase in premiums, excuse me, but also the historic premiums and the historic surcharge increases. It's just an overall uh view of the subject matter. It's a lot of information. They're very valuable, and that's what led us to the designation about three years ago. And I can tell you right now, it's probably been over, I want to say, close to over 800 advisors that have gone through the designation. And a lot of them, these advisors are are very comprehensive, holistic. They're all around, you know, there's these different names. They're tax planning, right? They're looking at their clients and say, how do we get you down to a 12% tax bracket or lower, right? We don't want you in uh 32, 36% tax bracket. So uh that that really is what led me to uh the world of Irma. And I've studied it for obviously the last three and a half years. And so what I do, Brad, to answer your question the last side, last uh section of it, is I actually, you know, prepare, train advisors on the subject matter of Irma, educate, but also if they're looking to do educational workshops in their local areas, like at libraries, community colleges, to really educate the pre-retired retiree on what how Irma can negatively impact your retirement. And I can tell you right now, three years ago, Irma has just the the the popularity of the word, the the tax, the the subject matter again, it's just it's it's grown increasingly over the last three years. They used to fight it off a lot, saying that this is important. Now I don't have to fight off, fight, fight it off as much because I think advisors, financial professionals are starting to realize the major impact of Medicare premiums.
Who Gets Hit And Why It’s Growing
SPEAKER_04Paul, I think this of this example, as you say all that, it's like to me buying a car, you know, until you've earned a certain brand of car, you don't pay attention to it. Then you go buy that car and you're like, well, that wait, that car is everywhere. It's on every street corner, every stoplight. Why does everyone own this car? And all of a sudden it's on your radar. For me, Irma was that like the same thing. You you come across it and it's in your lap because a client contacts you and says, Hey, I got this I-R-M-A-A letter. What is this? And then you have to deal with it and you're like, whoa, now once it's happened to you, it's like, well, it's happened to my friend, my cousin, my neighbor, the person in my church. It's everywhere. And so if you're listening right now and you don't know what Irma is, that's what we're gonna be talking about all day long today. And you want to know because it's going to impact you, your life, or the life of someone that you know and love. I guarantee you we're gonna be talking about that. So as we get started, we just want to say this if you want our help, if you've received an IRMA letter, if you have questions about your tax planning, your financial planning, you can call us anytime, 866-780 SAFE. That's 7233. Or you can just simply go to Ozarksretirement.com, click on the contact us button, and you can request a free financial consultation. So, Paul, let's do this as we get started. Income related monthly adjustment amounts. It is a mouthful. I've been through your IRMA University Income Related Monthly Adjustment Amounts, certified planner. Why do people like me need to go through this education? What is this IRMA stuff and how does it impact our listeners right now?
SPEAKER_02So, to really keep this simple so the whole world can understand us, I hope when I explain it, I hope everybody understands us, but I'll I'll do my best. If you make too much taxable income, whether you're going into retirement or currently in retirement, and that's coming from your 401ks that's been deferred for years, 403Bs, traditional IRAs, right? Tax deferred assets, okay? But if you make too much taxable income going into retirement, according to the Social Security Administration and the IRS, which is technically the federal government, okay, you run the risk of losing, and I say this, I quote this unquote, losing 60 to 100% or the majority of your Social Security net benefit. When I say that to somebody in a public setting or a public environment, like I did a couple nights ago at a party, you should see the look on their face. I bet. So that tells you that there is a lack of education on the shadow tax subject matter called Irma. Hopefully that explained it right there, Brian.
SPEAKER_04Well, let me let me read this from some of your material. You know, I'm blessed to have all of our slide presentations on IRMA, and I've seen all of our 2026 stuff. I want to read this slide. According to the 2022 Medicare Board of Trustees report, from 2022 to 2031, so the period we're currently in, an estimated$355 billion with a B, billion dollars, will be collected from Irma surcharges going into the general account of the federal government.$355 billion. And I know this, so when people I think it's like almost like annuities, Paul, and from this regard. Years ago, if you said annuity, people are like annuity, oh the you don't want those, they're terrible, they're awful. Don't pay it attention, don't listen to them, don't say it. Now everybody talks about annuities and education change. When it comes to IRMA, a lot of people say, oh, that'll never affect you. Just don't pay attention to that. It's no big deal until you read this stat. In 2026, 9.1 million people are being affected by IRMA, representing$32.3 billion in surcharges. By 2031, it's expected to be 13.5 million people affected, representing 63.8 billion. That doesn't sound like a small problem to me, Paul. It seems like a lot of people are dealing with this.
SPEAKER_02There's a major increase right now, I've seen. I mean, when you say 9 million retirees, and then you I it, you know, like T by 2001 31, they're projecting 13 million. It could be a much larger number. Could be 17 million. Absolutely. W why is that? Because when we were looking at the figure in 2022, at that time, you know, the uh Secure Act 2.0 with the non-spousal inherited IRA 10-year rule where you have to pay if you inherit a million dollar IRA or two million from your parents, and you're a son or a daughter, and you have to pay that basically that tax or pay that over, you gotta pay that over ten years or on the tenth year. Well, that's an additional modified adjusted gross income, right? It's taxable income. And I think, you know, there's about$80 trillion right now that's gonna be of the baby boomer money, baby boomer generation money, it's gonna be leaving the hands into the sons and daughters over the next 10 years, right?
unknownYeah.
SPEAKER_02And a lot of that's gonna be non-spousal inherited IRA. So that number could be bigger because at that time in 2022, the non-spousal inherited IRA wasn't as popular as it's becoming today. I'm seeing more and more cases of those situations.
Age 63 Lookback And Early Planning
SPEAKER_04I agree. And there's so many tax issues that this creates. People seem to forget, oh, if people hear this and think, oh, well, it's not that big of a deal. No, there's the silver tsunami, all this inherited money that's going to come in. And uh, what age are a lot of these people? They're 65 to 70 that are inheriting it from their 90 and 95-year-old parents. Or could could be a grandparent, could be an aunt or an uncle, or it could be anyone. Maybe there's so many people, Paul, that we have as clients who don't have heirs and they're leaving it to friends and to neighbors. And so it's unexpected money that you didn't think were coming in. If you're a non-spousal beneficiary, Secure Act 2.0, and you receive it, it's got to be liquidated over the next 10 years. You can take it all out up front, take it out over 10 years or liquidate it all by the 10th, but it's got to come out. And so what's that gonna do? Well, that's gonna come in as taxable income on top of all your other sources of income. And then boom, you didn't have a problem, and now you're one of the 9.1 plus million people who are gonna have a problem. And uh I know we're gonna talk more about this, but for our listeners, because we're gonna go into what affects IRMA, what are some of the brackets for IRMA, what what is included as taxable income, what's not. We're gonna talk about all that today. But just real quick, when does the federal government, when does the IRS start paying attention to your modified adjusted gross income regarding IRMA?
SPEAKER_02They start paying attention to it. So really a key age is 63. Because if you're enrolling in Medicare at 65, you know, they're gonna look at your, you know, they're gonna look at your tax returns. Uh, it's always two years back. So it's a two-year look back on your 1040, which is, you know, it's gonna tell you what your modified adjusted gross income is. So I think 63 is a very key age to, you know, I would say even 55 plus if you really want to get an overview of the you know, the education of tax planning in the subject matter of Irma and what it means. But I would say by 63, that's kind of a warning right now that um, you know, you're enrolling in Medicare at 65. You better, you better start understanding this at 63. That that's a key age to me.
Inside A Real IRMAA Letter
SPEAKER_04So good. And I will say this because I have one of the key IRMA letters in my hand. We're gonna talk about that in a moment. But here's the thing, Paul, you you just mentioned age 55. And so this hit me this weekend. I was at my farm, I had some tractor time, I call it tractor therapy. It's when I write a lot of shows and think through things like this, and it hit me. I turned the double nickel this year, Paul, up 55. And I think how many, how many people are out there listening thinking, oh, this is an old person problem? I don't I don't have to think about this. I mean, you're talking about something from Medicare. That's age 65. And I will say this, I was on someone's podcast as a guest last week, and I said, How fast did the last 10 years go for you? And they were like, Oh, like in a blink. Yeah. How fast will the next 10 years go for me? Like that, it'll snap. But here's the thing that hit me it's age 63 when the government starts paying attention to your income, and I'm a single follower, have been for many years. And so we go, okay, so I've got half the bracket that everyone else has, and I'm a high income earner. So I'm thinking I've got eight years until Uncle Sam's gonna go, oh yeah, you're one of those high income earners. I'm gonna nail you. And it's it's only eight years until then then. And then I go, okay, so the social security that I've been saving and contributing to double everyone as a as an employer of um of a small business. I go, okay, I pay in double. And how much of that am I gonna am I gonna get? Well, based on figures right now, nothing. None of it. I mean, it's just almost none of it because of how much they're gonna take back in IRMA. So those of you listening right now, you want to keep paying attention. When we come back, we're gonna jump into a brand new IRMA letter that walked into our office less than two weeks ago. And I'm gonna share it with you, and we're gonna be talking more about income-related monthly adjustment amount surcharges. So if you want our help, call us anytime, 866-780-7233, or just go to ozarksretirement.com, click on the contact us button. You can schedule a financial consultation right there on the website. Okay, Paul, let's do this. Let's talk about the dreaded Irma letter because you know, 9.1 million people received this letter back in November or December. I have one here that's actually dated November the 26th, 2025. But this came in with a client of ours and they didn't come in to meet with us about this. We were just doing some regular financial planning and doing a review. And they said, Boy, I'll tell you what, I got so upset with the person who does my Medicare. And I was like, why? And they said, Well, because I got this letter. And when they said I got this letter, I thought, okay, I know it's coming. And they said, Yeah, they've never talked to me about this. They never warned me about this, they didn't talk about how this was gonna affect my premiums. And so I said, Well, if you don't mind, I love collecting these letters. Do you mind if I share it as long as I don't share your information? They said, sure. So I have it right here. Man, I just I want to read a little bit of this letter so people can see what's coming if they don't have it yet, but how the government's gonna start paying to your income from 63 on, and I want to talk about it. So here we go. The Social Security Act requires some people to pay higher premiums for their Medicare Part B, medical insurance, and part D prescription drug plan based on their income. We use information the Internal Revenue Service IRS provides to us to decide if you will need to pay higher premiums based on your income. You are required to pay these higher premiums for 2026, which are called the income-related monthly adjustment amounts, IRMA. The IRMA information in this letter is for one year only. It goes down in there and talks about how the standard premium is$202.90, but they're going to pay an additional$487 for Medicare Part D based on their 24 income, an additional$91 for Part D. Paul, talk about this letter. I know a family member of yours got one recently.
SPEAKER_02So let's talk about how the letter gets originated. So when you enroll in Medicare, basically the Social Security Administration and the IRS are having kind of a party in a way. They're they're basically what they're doing is exchanging information. So Social Security Administration is giving um you know specific information of the retiree, and then the IRS is looking at that two years tax returns and saying, okay, does this does this couple or this single filer meet the in the income bracket thresholds to be in Irma, whether it's the first to the fifth bracket, that's how it all starts, okay? That letter right there. So when you look at that letter, okay, so that it's a problem, but it's gonna be a bigger problem going forward the longer they're in IRMA. Let me tell you why, is because if you go to the last 20 years, okay, the Medicare Part B premiums have been inflating by 7.7% on average anyway. Wow. Right. So when the Medicare Part B surcharge, going back to the Medicare Part B surcharge is inflating by 7.7, that means the Irma Part B surcharge is inflating another 7.4 to 7.7% on average annually. So that's you know, 7.7 plus 7.4 is around 14-15%. So you got you got 15% right there, right? Inflating each year over the last 17 to 20 years, and the colour two and a half percent. So going forward, based on the Medicare Board of Trustees, that is, it's a report that comes out in every April, it's 200 pages, by the way, compiled by composed of actuaries that are projecting where Medicare Part B premiums are gonna be, okay? They can tell you right now they're going to they have to inflate or they will inflate by at least seven to seven and a half percent or higher going forward. That's the Medicare Part B base rate. So if that happens, the this letter you just got, that IRMA surcharge is going to inflate by another seven, seven and a half percent. So if they have this letter and they stay in Irma, what what bracket are they by chance in that letter? Did you know, did they does it show what bracket it is by chance?
SPEAKER_04Or well, the ma of course the married filing jointly it was for this one year was based on income more than$749,000 because they had a oh wow. Yeah, it had a it had a one-time event that brought in a a huge chunk of income to them, which threw them up into that high bracket for that year. And anything above that, of course, that jumps your Part B premium up to$487. But normally they would fall into the just the 20% bracket and they would just be in tier one, but not for this year. Yeah, 100%.
Premium Inflation And Long‑Term Risk
SPEAKER_02Yeah. Having have looked at several IRIMA letters myself and read several Medicare Board of Trustees and CMS centers of Medicare services, I can tell you this, and this is more of an educational, not a scare tactic, please, educational tactic. Because if you're in the third or higher IRMA bracket for a minimum of eight to eleven years, that's maybe including a spousal benefit or a primary benefit, that social security benefit is next to nothing. Let me explain. The Medicare premiums eventually exceed that Social Security net benefit. Yeah. So the longer you're in Irma, yes, the more of a risk to your retirement. That's the that's really how the shadow tax of Irma is working right now.
SPEAKER_04Well, I want to jump into another segment and ask several key questions that just came to mind. So it's not even stuff that we've talked about ahead of time. And I knew this would happen on the show. It's just we're gonna blink and it's gonna be gone. But I want to talk about how it's affecting clients. Like when they get a letter like this, where's the money gonna come from? How do they pay for it? Um, what what if they're not even on uh uh Medicare or they they're on Medicare, but they haven't started their Social Security payments yet? So how do they pay for it? Want to talk about some things like that. But Sure. If you're listening and you either have received a letter or you've heard a lot of people talking about Irma, maybe you just went to a seminar or to an educational event and you'd never heard of it and they were talking about it. Now you're like, okay, this is on my radar. I want to learn more about it. We are income-related monthly adjustment amount certified planners. It's what we do every day. And we can help you with this. Just call us 866-780-7233 or go to Ozarksretirement.com, click on the contact us button. I will personally respond to your email and to your invitation to come and meet with us for a free financial consultation. Paul, let's do this. Let's let's put some real skin on these bones as we talk about this. Let's share some real examples of how this is going to affect the people listening right now. So let's talk about the different income brackets because you mentioned something before. What bracket did they fall into? Yeah. I had a light bulb moment this week when looking at all these brackets that I want to share something about this here in a minute, but let's just go over this, you know, what your standard premium is for 2026 and 2029, but then how high it can jump up to based on the bracket that you fall into. Let's talk about it.
SPEAKER_02So um let's do a little history first. So in 2007, that was when Irma was born. That was when it was originated, okay? Okay. And so at that time, the third IRMA bracket in 2007 was around$125 a month, the Part B surcharge. Okay. Okay. So that's what it was. In 2011, that actually jumped to, you know,$230 a month for the Medicare Part B, okay? And by 2000 this year, that's it, the third IRMA bracket. So with the third IRMA bracket this year, uh singles about$171 to$205,$205,000 for a single filer, and a married is about$342 to$410,000. So it's it's this this year, it's$527, close to$527 a month for the Medicare Part B surcharge. Okay. Having read several Medicare Board of Trustees reports, what the actuaries are saying right now, that by 2032, that third Irma bracket, Medicare Part B surcharge, that someone's in the third bracket's gonna be paying for for Medicare premiums, it's gonna jump to from$527 to$782 a month. Wow. At 2032. By 2034, it's gonna jump from$782 a month to$900 a month. So let's go back. In 2007, it was$124 a month,$125 a month, 2026 to this year. It's$527 a month. And by 2034, it's gonna be$900 a month. Are we seeing a trend here a little bit? Pattern?
SPEAKER_04Major inflation issue, right? And so let's so let's take this, let's use this as an example. I know this. When my father passed, um, my mother's personal Social Security benefit was about$800. You lose the lower, retain the higher. But let's say she was living on$800 a month and something happened, a qualifying event because of income. What if her Irma surcharges put her in the highest bracket and it was$900 a month, but her check is$800? What happens in that situation, Paul?
Brackets, One‑Time Events, And Exposure
SPEAKER_02So, yeah. So what would happen is that, yeah, I mean, if eventually with the inflation, how Medicare is inflating every year, eventually that that you know that gets that just gets decreased. And what also happens is eventually, if the Medicare premiums are exceeding a Social Security benefit, if they do, you're still getting taxed on that Social Security gross benefit, even though you're not receiving the benefit anymore. And then you simply get a letter from the Social Security Administration letting you know that, you know, these are your Medicare premiums, they're gonna be due. So you're gonna have to pay your Medicare premiums out of pocket. I hope nobody gets to that situation. But I unfortunately, I use the word unfortunately, okay? I've already seen several letters where I get a lot of financial professionals that says, no way, that can't happen. Yes, I have I have several letters of that situation. It's funny, I got a call from a gal three weeks ago. Okay, and everyone says Irma's a well talks. Well, well, you be the judge of this, okay? She calls in. I she said, Irma certified planner, can you help me out? I'm out of Omaha, Nebraska. I'm in Lincoln. Great, nice to meet you. Okay, I'm not your advisor. I'm not gonna get nosy with specific financial questions, but I gotta ask you some questions here, man. And so I, you know, she started, you know, kind of tell me her situation. She's in the third ermor bracket right now. She's been in there for two years, by the way. Okay. She's been doing all this research on the internet, trying to study Roth conversion, study tax planning. And then she goes, Well, I go, I I don't want to be nosy here. I mean, what's roughly your investable assets? So I just kind of know where you stand because you're in the third bracket. Like I just we were just talking about. Or third ermor bracket. And we know you know what that can do over a certain period of time. And she says, Well, I got about maybe two and a half, three million in investable assets.
unknownOkay.
SPEAKER_02I said, Time out. Time out. Why are you researching this stuff? Why are you looking on the internet about Roth conversions? Yeah. Isn't that your advisor, financial advisor's job? She stopped there, paused for a minute, and goes, you know what? I never thought about that.
SPEAKER_01Yeah.
SPEAKER_02Yes. Ali you ya.
Not Just A “Rich Person” Problem
SPEAKER_04Yes. Here we go. So but she's probably already thinking, hey, I see some problems coming down the road here, and no one's talking to me about this because we're seeing that, of course, thankfully, increasingly more advisors are, but no one's talking to me about this, and I'm going to have a future massive problem on down the road. I need to start getting rid of some of this taxable, future taxable income by doing Roth conversions now. So, well, this is what the light bulb moment was for me this week. So I appreciate you saying those things. I look at the, you know, so much of the time I look at the single side because in with 2,000 clients, we're we're dealing with the death every single week. There was a Friday uh client funeral this last week. So every week it seems like someone has passed away. And so we have people that are going from married filing jointly to single. There's also, you know, the number one fastest growing divorce rate in the country right now is for people above the age of 60. It's gray-haired people. So we're married filing jointly, used to it for many years, maybe 30, 40, 50 years now, they're back in a single bracket. So this is where it can really magnify this Irma problem. And I look at it and go, okay, the Part B premiums for 2026 range anywhere from 202 all the way up to$689.90. You know, it goes to$202,$284,$405,$527. But here's the thing when people say, oh, it's a rich person's problem. Well, if you're a single filer, the next to highest bracket starts at$205,000. That's not a mega wealthy person. You can blink in this country and generate$205,000 in income. You if you have income coming from several sources, and that's what I want to do in our next segment, is talk about what are all these income sources that can affect this. And so if you think, oh, well, that's just for the people who are mega ultra wealthy. Have you ever made$205,000 in your life before? Well, if so, you would have been paying the additional premium of what is it,$649.20 in 2026. That's the next highest bracket. And then don't forget about part D, which would be an additional$83.30. So it's not just a rich person's problem. So let's do this. We're going to come back and we're going to talk about what type of assets and what type of distributions affect Irma. If you're listening, you want our help, just go to Ozarksretirement.com, click on contact us, request a free financial consultation. We can run a report for you and see whether or not Irma is going to be an issue for you. Or if you're already in it, we can sit down with you and help solve the problem. How do we maybe you're in it right now, but we can help you be out of it in the future and we'll show you how to stop this problem. 866-780-7233 or Ozarksretirement.com. Okay, Paul, I'm looking at uh this sheet that you sent me. It's got uh 12 different blue boxes on it that show all the things that create Irma problems. And I know there's a lot of uh I say uh coffee shop talk and around the water cooler talk about what does and doesn't affect it, but what types of income can affect your Irma?
SPEAKER_02So let me start off with a story first. That's gonna lead into the types of income that count towards Irma. This is gonna be interesting. So I was at a holiday party, you know, family holiday party, um, you know, back in Christmas day, right? Christmas night.
SPEAKER_01Yeah.
SPEAKER_02You know, family, my wife's family went to my wife's family's house, and I don't know, you would think that everyone's talking about how their portfolios did this year in the stock market, right? Wrong. These are retirees talking, take in mind. They were saying, I just filed for Social Security benefits a couple years ago. I I'm just listening, I'm hearing this. And I, you know, and this Medicare is just kicking my butt. So, oh interesting. I I didn't say anything, you know, man. And so uh I asked them the simple question is Did you guys receive an Irma letter from the Social Security Administration? I mean, listen. Yeah. They were both very well off professionals, had a very successful career. A lot of them have Mooney bonds, municipal bonds. Okay. The reason I said that. Second is they have a lot of investment properties, rental properties. Okay. Rental income, real estate. Yes, number two. Okay, here we go. And they're both in the fifth bracket of Irma. They were complaining about this, right? And I said I started asking some very, you know, questions about their situation in Irma, and they kept asking me, um, where do you think Medicare premiums are going? Of course, what I'm relaying today is what I relayed to them, and they just looked at me and they said, This is a scam. That's what they told me. It's a scam. So a couple things. There's a reason I tell you that story is because that's coming from the general public, not the financial professionals. Sure. It's a lead-in, it's a conversation where now this is a concern of theirs. They thought they were getting all their social security, but that's not the case. So at their age now, they're thinking tax planning when could have been at age 55 plus, could have been at 63. Okay, here we go. So what income? So I said municipal bonds, the interest, interest on a municipal bond counts towards Irma. Okay, interest income.
SPEAKER_04Modified adjustments. Oh, my meatie bonds are tax-free, but the interest counts toward Irma. Don't forget that. Correct. Rental properties, right?
SPEAKER_02I had another guy. Oh, you know, I made 180,000, you know, in my career going into retirement. I'm just gonna try to lower it down to 90,000. So, really, what income is gonna be your retirement? Oh, it's gonna be rentals. Oh, guess what? That counts towards Irma too. Didn't know if you knew that. Nobody told me that. Well, I'm telling you right now. Okay, the message is getting is getting relayed. So W 2 wages. Okay? 401k, 403B. Let's go back to W2 for a minute. I just read an article on CNBC a couple days ago, according to AARP, like did some like kind of survey of like 3,000 retirees, okay, and like seven or eight percent of them are going back to work. I'm in Lincoln, Nebraska. When I go to like McDonald's, Target, and I I just walk around the store, there's 65 plus working in these in these retail environments.
SPEAKER_04Yes.
SPEAKER_02Okay.
SPEAKER_04Some of them because they have to, some of them because they want to get out of the house and do something, but that's gonna affect their Irma.
SPEAKER_02So when the article in the CNDC article, I wish I was interviewed. You know, hey, look at me, man. Interview, man. What I would have said in there, in that article, was it's the purchasing power over the last 20 years of the Social Security benefit that is leading a lot of these retirees to go back to work. When I said 7.7% Medicare Part B premium, Part D premium, the prescription drug, around 8%. Cola, 2.5% on average over the last 20 years. Yes, you are going to see more retirees go back to work. So other income, uh, I can say is uh the traditional IRA, right? 401ks, the 403Bs, yeah, um, regular W-2 wages. You know, that's never really discussed, but I think it's gonna be more of a hotter topic because you're gonna see more retirees unretire and have to go back to work.
SPEAKER_04Very good. What about uh pension income?
SPEAKER_02Pension income in real estate, like I said, investment properties.
SPEAKER_04Yeah.
SPEAKER_02Um, if you sell a house for a certain dollar amount, yes, you sell a business, yes, that counts.
SPEAKER_04And I think about this. So many people say, Oh, my dividends, I don't even use them, I just reinvest them. Dividends are part of dividend, dividend income.
SPEAKER_02That's a tax. I'm sorry, you're getting taxed on that.
SPEAKER_04And this is one I think that uh will bother some people, especially those who say this is a scam and they're right. The taxable portion of your social security count toward IRMA. So as you know, if you fall above above a certain threshold, if you're single, 32, uh, 20, 25,000, 32,000, or if you're married finally jointly, 32, and 44,000, if that gets brought back in as taxable income of your social security, it's going to count towards your IRMA. So just short-term capital gains.
SPEAKER_02Short-term capital gains. Yeah.
SPEAKER_04That's right. So wages, traditional 401k, pension income, traditional IRAs, CEP IRAs, rental income, 403Bs, capital gains, interest from muni bonds, distributions from 457s, dividends, rental income. It's all there. So let's do this real quickly. We don't have a lot of time, but let's talk about things that wouldn't affect it, Paul, because this is big from a tax planning standpoint. What will not affect your IRMA?
SPEAKER_02So, you know, full or partial rock conversions.
unknownOkay.
SPEAKER_02Um, another one is life insurance with cash value, if positioned appropriately. You know, there's uh a lot of talk out there right now, um, obviously on you know the internet and you know the news about you know some of these life insurance strategies. You just want to make sure it's positioned correctly and you speak to a professional about that. But yes, anything life insurance with cash value related is uh can be avoided and it isn't it is invincible income from the IRS.
SPEAKER_04Yes.
SPEAKER_02So the the Roth conversion to me right now, I'm sorry, is more vital, more invaluable today than it was 20 years ago. And my definition of a Roth conversion is you want it you want to wanna pay the tax revenue to the federal government now, or do you want to do you wanna basically pay that for the rest of your retirement life?
What Doesn’t Count And Roth Strategy
SPEAKER_04What do you want to do? And not only the federal and state taxes would be coming out of the traditional account of Roth, but also the IRMA taxes, also the Social Security taxes. So yes, I'm gonna pound that drum, huge uh for everyone listening. We're major pro advocates of Roth conversions. And here's the thing before age 63, because doing the conversions creates a taxable event. You don't want to be doing massive Roth conversions when you're 68 or 69, uh, except for the fact that it may throw you into IRMA for a year or two when you're doing those conversions, and it will solve the problem for forever on into the future. But it's better to be proactive and do them with a planner now before you turn age 63 when they start paying attention to your income. Contribute to the Roths and do conversions and get everything moved to the Roth. That's that's a big deal. So, and I'll say this, Paul, just quickly, quick plug on the life insurance side. I own 10 life insurance policies. There's a reason why I do. It's it's secrets of wealthy that I learned years ago. Read a lot of books, talked to a lot of really smart people who knew the tax code inside and out, and they owned a ton of life insurance. And yet everyone else was saying, oh, you should never own life insurance. It's a scam. You should, and real big important people say, don't own cash value life insurance. They don't know the tax code. I there's a reason why I took out two new policies in December of 2025, why I put more than$100,000 a year into life insurance. Distributions from specific types of life insurance policies used however you want to in retirement to supplement your income. I've bought farms with distributions from life insurance policies. It is not taxable income and does not affect your IRMA. So when someone tells you you should never own it, you need to talk to someone who understands the underside of it. And a tax planning certified professional will be a great place to start. Uh well, let's take a quick break, come back for one more segment. Friends, we are retirement income certified professionals. We are tax planning certified professionals. And yes, we've been through Irma University, income related monthly adjustment amount, certified planners. Call us for a free financial review, 866-780-7233, or just go to our website, Ozarksretirement.com, click on contact us, and we'll reach back out to you. Paul, I'm so grateful for always having you on the show. You just are a wealth of knowledge. And I know we've only got a few minutes left. I I wanted to talk about this as we kind of wrap up. You know, I've learned over the years and you have too, that the majority of people have their money saved in tax-deferred accounts, not tax-free. The Roth idea is catching on, and a lot of people are contributing to Roths and they're converting to Roths, but the majority of money is in traditional 401ks, traditional IRAs, because no one was talking about Irma way back when they started their career. No one was talking about future taxes. It was, hey, take this tax break now, and everyone did. So you've got people that have millions and millions of dollars saved up in tax-deferred accounts, and it's going to create a problem for Irma in the future. So let's talk about. I know you talk about there are four different things that they're examples of ways your tax-deferred assets are taxed once you start using them. Let's talk about it real quick.
SPEAKER_02Yeah, absolutely. So, you know, we all know that life is good when you live a tax-deferred lifestyle, right? Life is good. You don't ever have to, you know, you don't get a tax bill from your for all 1K for the next, you know, from your 401k for the next 30 to 35 years, right? Or 40 years of your working life. Nobody does, right? And so by the time you start getting into 63, 66, kind of the federal government is looking at that backside. So how are we going to recapture a lot of that tax? Okay. It's reality. That's exactly what happens. That's why Irma leads, it's a brain bunch. It leads to all of its other brothers and sisters of taxes and retirement. Okay. That's why Roth conversions are ever invaluable, is because of all the different taxes you're going to incur when you are actually retired. So to answer your question here, when someone actually takes an RMD, right? That's taxed as ordinary income. Okay. Absolutely. My dad did a uh when he retired just recently, but in 2010, he was a he was a physician and Omaha orthopedic surgeon for a lot of years. Yeah, he did a Roth conversion. He did it. It was smart. It was a smart move. I give him 100% credit. He did a Roth conversion on the majority of his assets. Guess what? He's retired now. Life is good.
SPEAKER_01Yes.
SPEAKER_02It is. He made that decision in what 16 years ago? So my point is that when you do take an RMD, here's another issue. Within that seventh year, that RD payout increases by 25%. By the 10th year, it increases by 50%. Okay. And then if you start taking that RMD, what's going to happen is you're going to get probably taxed on your Social Security benefit. And you will, you will. It's not it, it's not if you will. Correct. And it can be up to 85%. Okay? That's how a Social Security benefit determines if it's taxed is based on an RD. Okay. And what happened is what's the stock market done over the last 10, 15 years? You know, I just looked at the S P five-year return over the last five years is 77%. That's 15% a year over the last five years. Guess what? Your RD is.
SPEAKER_04Yes. So good. There's so many different issues that Irma creates. It's not just a, oh, I got this letter, so I'm going to have to deal with this this one year, and it only bumped me up for a few dollars. I looked at it, Paul, if uh while I was doing the math yesterday, if a person gets thrown into the highest bracket and they're married filing jointly, you're talking about almost$19,000 in premiums for that one year. And so I just say to anyone, how many of you want to go just light fire to 19 grain and just say, here, government, you take just take it. It's no big deal. It's only for one year. Here you go. You can go buy a car with that. So I'm just like, no, this is not this is not something we want to overlook. So we're I know we're out of time, but just Real quick, what quick advice would you give to our listeners today if they're if Irma's on their radar? Maybe they're 55 and they're thinking this seems like a down the road problem. What do they need to be doing right now to prevent a future Irma problem on down the road?
SPEAKER_0215 20 years ago. What did the great edge slot say? Do you want to be on the government's plan? Or do you want to be on your plan? I'm not I'm not gonna come up with that answer. I'll let I'll let you guys answer that question for yourself.
The Tax Domino: RMDs To Social Security
SPEAKER_04I guarantee you, because what Uncle Sam has planned for you is something you're not going to want to deal with. He's already with Irma created a way to come in and take a good portion of your social security and come back away from you. So, friends, one tax leads to another tax leads to another tax. So Paul teed this up perfectly. I've been in the Ed slot group for 16 years. That's why Ed will always say this the number one thing that will separate you from the retirement of your dreams is taxes. It's not because you didn't have the biggest, best returns. So much of the time people are focused on how much money they're making, what the return is. It's not the return, it's how much of that you get to keep once you take it back out and once you give it to your heirs. So, Paul, thank you for joining us today. We're gonna do this again in the future. Irma's not going away. We're gonna have to deal with ugly Anne Irma for many, many years to come. It's gonna get worse. Stay here, stay tuned to the right source. More than 800 shows on the radio over the years. Just go to Ozarksretirement.com, click on contact us, request a free financial consultation, and we'll help you solve these problems with really good tax planning. Paul, thank you so much for joining us today.
SPEAKER_02Hey, it was my pleasure, Brad. I uh always enjoy being on your show. It's a blessing. And uh the industry is lucky to have to have professionals like you.
SPEAKER_04Hey, thank you so much. And for those of you who are listening right now, you can go to YouTube and watch this. Just go to YouTube, type in Brad Pistol. You can type in Irma. All the videos with Paul, there are many of them. They'll pull up and you can watch them from the comfort of your home. Well, I'm about out of time, and I would like to thank you for listening to Safe Money Radio. If you're serious about your financial future, give me a call, and together, we'll get your retirement savings on the fast track to accumulation while reducing exposure to market losses. Thanks for listening, and until next time at the same time, I'm Brad Pistol, reminding you to stay safe so you can step into a secure future.
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