From 24/7 Wall St. · Gerelyn Terzo · · 1m
Retiree Moves $700,000 Into Tax-Free Bonds
Retiree shifts $700,000 to tax-free municipal bonds as 20-year yields hit 4.5%.
In brief
Retiree shifts $700,000 to tax-free municipal bonds as 20-year yields hit 4.5%. A retiree moves $700,000 into tax-free municipal bonds to avoid Medicare surcharges, keeping $30,352 in annual interest after taxes. Originally reported by 24/7 Wall St..
Tax-Free Bond Move
A retiree moves $700,000 into tax-free municipal bonds as 20-year yields reach 4.5%.
Annual Interest Exempt
The bonds pay $31,500 in annual interest, which the IRS exempts from federal income tax.
Medicare Surcharge
Medicare premiums increase by $1,148.40 annually for $31,500 in interest.
IRMAA Threshold
Retirees with income under $109,000 ($218,000 joint) pay standard Medicare premiums.
Muni Interest Impact
Muni interest raises MAGI to $126,500, triggering a $1,148.40 Medicare surcharge.
Survivor Scenario
Married couples with $126,500 joint income pay no surcharge until one partner dies.
2028 Premiums
Bonds bought now set 2028 Medicare premiums, with 2027 interest affecting 2029 rates.
Tax-Free After Surcharge
The retiree keeps $30,352 of $31,500 annual interest after Medicare surcharge.
The main idea
A retiree moves $700,000 into tax-free municipal bonds to avoid Medicare surcharges, keeping $30,352 in annual interest after taxes.
