Severance pay or lump sum at retirement: effect on IRMAA
By Elder PaperworkUpdated
Short answer
A payout the year you stop working can raise that year’s income.
Retirement is a work stoppage. Form SSA-44 Step 3 lets you report the lower income you expect next year.
The new decision can’t take effect before the year of the event.
Sources: Form SSA-44 (12-2025); POMS HI 01120.030; POMS HI 01120.005. Read November 4, 2026.
Key facts
Why can a payout raise IRMAA?
IRMAA uses the income on a tax return. A large payout raises the income for that year.
That year can then set a later premium.
How do I report next year’s lower income?
Form SSA-44 Step 2 covers a drop that already happened. Step 3 covers a drop you expect next year.
You give your estimated AGI, tax-exempt interest and filing status. Later, you send your signed return.
When does the change apply?
A request made this year for income that drops only next year takes effect next January.
Never before the year of the work stoppage.
Check your case before you send anything.
Check my savingsHow do I ask?
Social Security lists these ways to send Form SSA-44 with your evidence:
- Online, after you sign in to your account
- By phone at 1-800-772-1213 (TTY 1-800-325-0778)
- By fax or mail to a Social Security office
You can do this yourself, for free.
Questions
Is severance itself a life-changing event?
The event is the work stoppage. The payout is part of that year’s income.
Can I report income I only expect?
Yes. Step 3 of Form SSA-44 is for next year’s expected income.
When does it start?
A request now for next year’s income takes effect next January.