Roth Conversion Raises Medicare Costs

With all the talk of Roth conversions in 2010, I’d like to bring attention to a little known consequence of doing a Roth conversion- it increases your income and therefore could trigger a higher Medicare premium.  Currently, most retirees pay $96.40 for part B coverage. However, if you claim the conversion income over one and/or two years you will likely be push into a very high income bracket and therefore have higher Medicare premiums for those corresponding years. To help with your planning, see Medicare’s income thresholds and subsequent premiums below:

Erin