When a 401k is rolled over to a Roth IRA the transaction is considered income. Yes, you do pay income tax anytime you withdraw from a 401k. However, 100% of a “rollover” goes into the Roth IRA.
If you are on Medicare, this higher income causes your Medicare Premium to potentially skyrocket due to IRMAA (Income-Related Monthly Adjustment Amount). Yet, you personally did not have any additional income in your pocket to pay the higher premium.
You pay income tax anytime money is withdrawn from a 401k, why create an additional retirement expenditure for higher Medicare Premiums?
SOLUTION: Do not consider 401k rollover to a Roth IRA dollars in calculating Medicare Premium.