IRMAA Brackets, Social Security, Annuity Inflation, QCDs, Listener PSAs: Q&A #2636

Full analysis

Jim Saulnier and Chris Stein work through four listener questions on IRMAA brackets after a spouse's death, Social Security claiming when a spousal-benefit step-up is in play, how to account for inflation when buying an annuity to cover essential expenses, and how after-tax IRA basis affects a QCD used to fund a charitable gift annuity. Practical rules and numbers throughout — worth the listen if any of those topics apply to you.

What was covered

• IRMAA filing status after a spouse's death. Jim Saulnier explained that IRMAA (the Medicare premium surcharge for higher-income enrollees) uses the filing status that applied in the income year being looked back on — typically two years prior — not the filing status in the year the surcharge is applied. A widower who filed jointly in 2026 would have that joint return's income run through married-filing-jointly IRMAA brackets in 2028 by default, even though he is now single. The SSA-44 form lets you request a redetermination using a life-changing event — death of a spouse, remarriage, or divorce — so Medicare instead uses your current-year income and current filing status.

• Social Security claiming when a spouse will gain a spousal benefit step-up. George, a 64-year-old engineer in Ohio, asked whether his wife's $800-a-month spousal step-up over three years makes full retirement age (FRA) claiming smarter than waiting to 70. Chris Stein's answer: the three years of extra household income is likely overwhelmed by the survivor-benefit loss. When the first spouse dies, the smaller benefit disappears; the survivor keeps only the higher one. Claiming at FRA instead of 70 permanently reduces that survivor floor.

• Annuity laddering vs. built-in COLA to handle inflation. Jim and Chris addressed how to size an annuity purchase for what they call the "minimum dignity floor" (MDF) — essential expenses: food, utilities, transportation, housing, healthcare. The shortfall between secure income and those expenses often grows faster than expenses themselves because Social Security COLAs are modest and most private pensions have no COLA at all; they said they sometimes see the gap growing 6–9% annually in client projections. Two strategies: buy a flat annuity now (lower cost) and layer on more purchases later ("laddering"), or buy a single annuity with a contracted annual increase built in. The downside of laddering is that you face financial decisions in your late 70s and 80s when cognition may be declining.

• QCD with after-tax IRA basis funding a charitable gift annuity. A listener asked how the pro-rata rule applies when his IRA contains after-tax basis (Form 8606 territory) and he wants to do a $55,000 QCD to fund a charitable gift annuity — a one-time-per-lifetime option introduced by SECURE 2.0, with the $55,000 limit. Jim Saulnier's key ruling: in a QCD, pre-tax dollars always move first. After-tax basis cannot receive QCD treatment. If he has more than $55,000 of pre-tax dollars in the IRA, the full $55,000 QCD is clean; his basis is untouched. Only if his total IRA balance is smaller than $55,000 does the after-tax portion cause complications — and those after-tax dollars could generate a charitable deduction, not a QCD exclusion.

• Three listener PSAs. A listener recommends tagging every transaction in a budgeting app (she uses one called Copilot Money) as either essential or discretionary for two or three years before retirement to build accurate spending baselines. A second listener pointed out that a homebuyer relocating across states should rent after selling, rather than engineering a complex bridge-financing arrangement. A third noted that a seller can include a 60-day leaseback provision in the listing — staying in the home rent-free after closing — giving time to complete a purchase without tapping retirement accounts.

Notable claims & predictions

• Jim Saulnier on IRMAA filing status: "Whichever year they're using for your modified adjusted gross income, they're going to decide if you were single, married filing jointly, or head of household — that filing status is used for the IRMAA brackets in the year they're applying IRMAA." Translation: a widow's 2026 joint return gets measured against joint brackets in 2028 unless she files an SSA-44 to switch.

• Chris Stein on survivor risk vs. spousal step-up: "Three years of this $800 a month easily gets overwhelmed when you consider that piece" — meaning the years a surviving spouse might live on a permanently reduced benefit if the higher earner claims at FRA instead of 70.

• Chris Stein on when clients typically need to buy a supplemental annuity: "For most of you, it's going to fall somewhere between 78 and 83" — anecdotal from their client base, not a population study, but useful as a planning anchor.

• Jim Saulnier on QCD and after-tax basis: "Pre-tax dollars always move first in a QCD. After-tax dollars cannot get QCD treatment." No pro-rata mixing applies to QCDs — the rule that blends pre- and after-tax money on normal IRA withdrawals does not govern QCDs.

• Jim Saulnier on the MDF gap growth rate: "We sometimes see it growing at 6, 7, 8, 9% per year in certain cases" — driven by the assumption that MDF expenses (especially medical) inflate faster than Social Security COLA, and that many pensions carry zero COLA.

• Jim Saulnier on the $55,000 charitable gift annuity QCD limit: "It's not yearly — it's once in a lifetime, adjusted for inflation." Listeners who think they can do this annually are mistaken.

Fact check

IRMAA: filing status matches the income year, not the application year. This is accurate and matches IRS and SSA rules. The SSA-44 life-event redetermination process is real and the named events (spousal death, marriage, divorce) are correct triggering events.

QCD: pre-tax dollars move first, no pro-rata rule. This is correct under current IRS guidance. The pro-rata rule that applies to ordinary IRA distributions does not apply to QCDs; the QCD comes exclusively from pre-tax (never-taxed) dollars, and basis remains in the IRA.

$55,000 charitable gift annuity QCD limit: once per lifetime, not annual. Correct. SECURE 2.0 established a one-time limit (indexed for inflation) for a QCD to fund a charitable gift annuity or charitable remainder trust — it is not a recurring annual option.

Jim Saulnier initially said U.S. public debt is "twice our GDP." He caught himself and corrected to "100% of GDP" mid-show. The corrected statement is closer to accurate for the period described; the uncorrected version (200% of GDP) was wrong and he retracted it on air.

Social Security COLA assumed at 2% in their projections. Jim Saulnier acknowledged this is "a little below its historical average" and described it as a conservative assumption. That framing is fair — the long-run historical COLA has averaged somewhat above 2%, and listeners should know their projections are deliberately conservative on this input, which affects how large the MDF gap appears.

Claim that most private pensions carry no COLA. Described as a general observation, not a cited statistic. It is broadly true that most private-sector defined-benefit pensions have fixed payments with no inflation adjustment, but the claim is unverified as a universal rule and will vary by employer and plan document.

Why this matters for you

• If your spouse died in the past two years and you're on Medicare, check whether your 2022 or 2023 joint return is driving a high IRMAA surcharge in 2024 or 2025. Filing the SSA-44 to request a redetermination based on your current single income and filing status could reduce your Medicare premium surcharge immediately — no waiting for the two-year lookback to roll off.

• **If you are the higher earner in a couple and your spouse receives a small Social Security