I took from my 401(k). What happens to my Medicare Part B premiums?

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Q. I recently drew money from an old 401(k) account. How does this affect my Medicare Part B premiums?
— Retired, soon

A. One of the complexities of retirement planning is that there are many interconnected moving parts that sometimes lead to unintended consequences.

Increases in premiums paid for Medicare Part B based on your income is an example of that complexity.

The premium you pay for Medicare Part B depends on your income from two years ago, said Deva Panambur, a fee-only planner with Sarsi, LLC in West New York.

For example, you pay the Standard Medicare Part B premium of $164.90 per month in 2023 if your modified adjusted gross income — your adjusted gross income with certain adjustments such as adding back tax-exempt interest income — in 2021 was less than $97,000 if you are filing single or married and filing separately, he said, or less than $194,000 if you are filing jointly.

Your premium would be $230.80 per month if your income was between $97,000 and $123,000 if filing single, or between $194,000 and $246,000 if you file jointly, he said.

Your premium increases further at higher income levels, he said.

“If your withdrawal of pre-tax money from your 401(k) account tipped you into a higher income level in any year, then you may have to pay a higher Medicare Part B premium two years later,” Panambur said. “If you expect your income to go down in the year(s) after you tipped into a higher level because of certain events such as divorce, marriage, you stopped working, etc., then you may contact the social security administration to have them consider this new information in setting your premium.”

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This story was originally published on Dec. 9, 2022.

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