A short YouTube segment in which Craig Wear, CFP® explains a strategy to reduce long-term Medicare premiums by managing future Required Minimum Distributions (RMDs). He recommends calculating the effect of future RMDs on Modified Adjusted Gross Income (MAGI) and suggests Roth conversions now to lower future RMDs, potentially saving on income tax and Medicare costs over time.
So it's kind of like ripping off the band aid. Over a period of several years, you pay a lot higher Medicare premiums, but then once the band aid's off, you go down to the minimum amount for the rest of your lifetime. So the strategy here is really, you need to calculate the impact of your future RMDs on a number that they use called Modified Adjusted Gross Income. And that's that number is used to determine what your Medicare premiums are going to be. Lowering your RMDs through conversions now could save you on both income tax and Medicare costs.
