At 66, They Plan to Buy a $450,000 Condo With IRA Cash and Avoid a Mortgage, but Medicare Could Raise Both Premiums in 2028

Withdrawing $450,000 from an IRA to buy a condo outright can seem like a simple, debt-free retirement move — until the tax return shows up two years later and triggers an unexpected Medicare bill.

A married couple, both 66, have found the condo they want for retirement. It costs $450,000, and they want to own it free and clear, so they plan to take $450,000 from his traditional IRA this year, before taxes. Two years later, Social Security is likely to send each spouse a letter showing a Medicare charge they did not anticipate.

Most retirees never receive that notice. The income-related monthly adjustment amount, or IRMAA, affects only about 8% of Medicare Part B enrollees. For a married couple filing jointly, modified adjusted gross income (MAGI) of $218,000 or less means paying the standard $202.90 monthly Part B premium. A single large IRA withdrawal would push this couple far above that level.

Cash Purchase Still Counts as Taxable Income

Money taken from a traditional IRA is generally taxable, and using it to buy a home does not change that. The withdrawal is reported on Form 1040 and becomes part of adjusted gross income. Social Security then uses MAGI to determine IRMAA, which includes adjusted gross income plus tax-exempt interest income. Even interest from municipal bonds that appears tax-free is counted.

Social Security relies on the tax return it receives from the IRS, usually from two years earlier. A withdrawal taken in one year affects premiums two years later. If the couple takes the money out before year-end, it counts toward that year’s income. Waiting until January would shift the withdrawal into the following tax year and could move the Medicare premium increase to a later year instead.

Form SSA-44 does not offer relief in this situation. That form is used for income reductions tied to qualifying life events such as retirement, divorce, or the death of a spouse. A voluntary IRA withdrawal to buy a condo does not qualify, no matter how much it increases MAGI.

Two Spouses Mean Two Separate Surcharges

Assume the couple also has $100,000 in other household MAGI from a pension, dividends, and the taxable portion of Social Security. That would bring their total MAGI to $550,000. They would fall into the joint income bracket above $410,000 and below $750,000. Because both spouses are enrolled in Part B and Part D, each one pays the surcharge separately.

The Part B surcharge alone comes close to the headline number. Once Part D is added, the couple’s extra Medicare cost reaches $12,710.40 at current rates. Each spouse’s total Part B premium would rise to $649.20 a month, and the Part D surcharge would be added to whatever their drug plan already costs. IRMAA is only one of several Medicare charges that can catch retirees off guard, and other hidden costs can add up as well. That is before income tax on the IRA withdrawal is considered. If they pay that tax from the IRA itself, they would need to withdraw even more, which would increase MAGI further.

Could They Fund the Condo Another Way?

Different funding sources affect MAGI in different ways:

• Existing cash: adds nothing to MAGI.
• Taxable brokerage sales: only the realized gain counts; the original cost basis is not taxed again.
• Smaller IRA withdrawals spread over several years: four annual withdrawals of $112,500 would result in MAGI of $212,500 each year, assuming other income stays the same. That would remain below the 2026 surcharge threshold, though future limits and borrowing costs would still matter.
• Borrowing: a mortgage or home equity line could cover the purchase, with IRA withdrawals used later to pay it down.

Splitting the withdrawal into just two parts offers only limited relief. If the couple divided the money equally between December of one year and January of the next, their MAGI would be $325,000 in each year. That falls into the $274,000 to $342,000 range, where the couple would still pay $11,539.20 in surcharges over two years. The savings would be only slightly better than taking the full withdrawal all at once.

The comparison should include cash, low-gain investments, and financing before any large IRA withdrawal is made. Spreading withdrawals over several years may reduce both taxes and Medicare premiums, but borrowing costs could erase those benefits if interest rates remain high. Those costs need to be weighed against the income taxes and surcharges created by a large IRA withdrawal. The equation can also change after the death of a spouse, when the surviving partner may face the lower single-filer threshold of $109,000. A withdrawal sized for a married couple could still push the survivor into surcharge territory.

What to Check Before Closing

1. Estimate starting MAGI. Use last year’s Form 1040, add line 11 to line 2a, and that gives the figure Social Security will use before any new withdrawal.
2. Ask a CPA to compare the options. Review the income tax, withholding, IRMAA tier, and loan interest for a one-time withdrawal versus a four-year withdrawal plan. Do this before signing the purchase contract, since the year the IRA money is taken out determines when it counts as income.
3. Review both spouses’ coverage. Each spouse enrolled in Part B and Part D pays a separate surcharge. Map out the premium impact for the relevant future years before any money leaves the IRA.