The Crossover Zone: How IRA Withdrawals Can Trigger the 3.8% Medicare Surtax
By Michael Kitces, MSFS, MTAX, CFP, CLU, ChFC
Horsesmouth Essential: While retirement distributions are not considered investment income for tax purposes, the reality is that a withdrawal can indirectly trigger the additional 3.8% surtax if there is enough existing investment income. At that point, investors have entered the “crossover zone”—which offers income shifting and tax planning opportunities for proactive advisors.