From 24/7 Wall St. · Gerelyn Terzo · · 1m 10s
Selling S&P 500 Fund Pushes Retiree into Higher Medicare Premiums
A 68-year-old sells his 1996 S&P 500 fund for $310,000 gain, triggering higher Medicare premiums in 2028.
In brief
A 68-year-old sells his 1996 S&P 500 fund for $310,000 gain, triggering higher Medicare premiums in 2028. A retiree selling an S&P 500 fund he bought in 1996 faces higher Medicare premiums in 2028 due to a $310,000 capital gain. Originally reported by 24/7 Wall St..
Selling S&P 500 Fund
A 68-year-old sells an S&P 500 index fund he bought in 1996 to move into bonds.
Capital Gains Windfall
The sale locks in a $310,000 gain that pushes him into a higher Medicare premium bracket in 2028.
Medicare Income Surcharge
IRMAA reaches about 8% of Part B enrollees, with single filers under $109,000 paying $202.90 monthly.
MAGI Impact
The gain raises his MAGI to $390,000, landing in the single bracket over $205,000 up to $500,000.
Premium Increase
Part B premiums jump to $649.20 monthly, including a $446.30 surcharge, with Part D adding $83.30.
Tax Implications
Selling in stages can backfire, with single filers above $200,000 owing a 3.8% net investment income tax.
Selling Strategy
Rebalance inside retirement accounts first, pull every tax lot, and pick the tax year on purpose.
The bottom line
A retiree selling an S&P 500 fund he bought in 1996 faces higher Medicare premiums in 2028 due to a $310,000 capital gain.
