Tricare for Life + Medicare + Roth gold IRA

Updated: July 30, 2026

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Roughly 2.1 million uniformed service members are estimated to hold a Thrift Savings Plan account (the TSP covers approximately 7 million total participants across federal civilian and uniformed personnel). The Defense Health Agency reports that more than 2.0 million retirees, dependents, and Medicare-eligible family members are enrolled in Tricare for Life as of 2026.

For a military veteran working in a federal contractor role between separation and Medicare-eligibility age, the planning question is not whether to enroll in TFL (enrollment is automatic with Medicare Part B). The real question is how to size the pre-tax retirement balance that will produce the IRMAA-relevant income at 65 and every year after.

The window that matters runs from separation through the 65th birthday. In those years, the contractor 401(k), the TSP, and any rollover IRA can still be converted to Roth at a controlled cost.

Element I of the planning is the income inventory, the line-by-line projection of DFAS retired pay, VA disability compensation, contractor wages, and the projected RMD that our military pension and RMD tax-stacking guide walks through. The current article picks up where that inventory ends and addresses the additional Medicare and Tricare for Life layer that begins at 65, plus the Roth gold IRA destination question for the converted dollars.

What changes at 65: Tricare for Life, Medicare Part B, and the IRMAA layer

At 65 the military retiree shifts from active-duty-family Tricare coverage to Tricare for Life, which the Department of Defense describes as wraparound coverage that pays after Medicare. The transition has three moving parts the retiree must understand before any Roth conversion math is run.

Medicare Part A. Premium-free for any worker (or military member) who paid Federal Insurance Contributions Act (FICA) taxes for at least 40 quarters under 42 U.S.C. §1395i-2. The retiree enrolls in Part A automatically when first eligible. The Tricare for Life eligibility rule under 10 U.S.C. §1086 requires that the retiree be enrolled in both Part A and Part B to keep TFL active.

Medicare Part B. Carries a monthly premium ($185.00 standard in 2026 per the CMS premium fact sheet) plus an income-related surcharge under the Income-Related Monthly Adjustment Amount (IRMAA) rules in 42 U.S.C. §1395r(i). The surcharge is determined by the modified adjusted gross income (MAGI) reported on the federal tax return filed two years earlier.

A 2026 IRMAA tier is decided by 2024 MAGI; a 2028 IRMAA tier is decided by 2026 MAGI. The lookback is the single fact that makes pre-65 Roth conversion timing strategic.

Tricare for Life. Premium-free secondary coverage that wraps around Medicare. The retiree pays no TFL premium, but the Part B premium and the IRMAA surcharge are the price of staying TFL-eligible. A retiree who declines Part B forfeits Tricare for Life entirely, which is the default trap that disciplined Roth-conversion planning is built to avoid.

How the IRMAA tiers stack: the 2026 schedule and the two-year lookback

The Social Security Administration publishes the IRMAA tier schedule annually; the 2026 schedule applies the following premium amounts to a Part B beneficiary based on 2024 MAGI. The table summarizes the brackets for single filers and joint filers and the resulting monthly Part B premium for one beneficiary.

The cliff feature matters more than the slope. A single retiree with $106,000 in MAGI pays $185.00 monthly. One dollar more, at $106,001, pushes into Tier 1 at $259.00. The $74.00 monthly cost difference for a single beneficiary is $888.00 annual; for a joint-filing couple where both are 65, the cost is $1,776.00 annual for the same dollar of MAGI.

A Roth conversion that crosses an IRMAA cliff for one year only is a self-inflicted cost the retiree often does not see until the Social Security benefit verification notice arrives the following October.

Why the years between 59½ and 65 are the planning window

Three facts close around the same calendar window and make the pre-65 years the operative period for a military retiree planning a Roth conversion route.

First, the 10% additional tax under IRC §72(t) on early distributions stops applying at 59½. A conversion is technically a distribution followed by a contribution to the receiving Roth; the conversion itself is not subject to the 10% additional tax, but any withholding paid from the converted balance is. Past 59½ the conversion is clean of penalty risk.

Second, the contractor 401(k) and the TSP can be consolidated into a single rollover IRA at separation, which simplifies the conversion mechanics and lets the retiree convert from one balance instead of three. For the consolidation steps, see our contractor 401(k) and TSP consolidation guide.

Third, the 2024 MAGI sets the 2026 IRMAA tier; the 2025 MAGI sets the 2027 tier; the 2026 MAGI sets the 2028 tier. A retiree turning 65 in 2026 has already locked the 2026 and 2027 Part B premium based on the 2024 and 2025 returns.

Your conversion plan in those years sets the price you will pay for your first two Medicare years. Conversions in 2026 and later lock the IRMAA tier for the rest of retirement. The corrective window is short, two to six years, and it closes at 65.

Step-by-step: planning the pre-65 conversion ladder for a Roth gold IRA destination

The procedure has six ordered steps for a military retiree with a TSP balance in the industry-reported around $200,000 to $500,000 range plus a contractor 401(k). Done in this sequence, each conversion year stays inside a chosen IRMAA tier and the receiving Roth gold IRA accepts already-taxed dollars that no future RMD will touch.

Figure 1. The six-step pre-65 conversion sequence. Steps 1 through 3 inventory the income and the receiving accounts. Steps 4 through 6 size the conversion ladder against the IRMAA tier and direct the converted dollars to the Roth gold IRA.

1. Inventory the income through age 78. Project DFAS retired pay (with COLA accrual), VA disability compensation (non-taxable), projected contractor wages year by year, projected Social Security claim age and benefit, projected RMD beginning at the SECURE Act 2.0 age of 73 or 75 under IRC §401(a)(9). The first three lines form the floor of MAGI; the conversion sits on top of that floor.
2. Identify the target IRMAA tier. Decide whether the household will accept Tier 1 every year, Tier 2 in two select years, or strict Base tier discipline. The choice is a function of how much pre-tax balance must be converted before 65 to flatten the post-65 RMD.
3. Open the receiving Roth IRA at the dealer that will hold the gold. A self-directed Roth IRA at a custodian that supports physical metals storage at an IRS-approved depository. The dealer relationship is opened in the same step because the conversion check is wired to the custodian for benefit of the Roth, not held in cash for any length of time.
4. Execute the conversion sized to the top of the chosen IRMAA tier. Calculate the gap between projected MAGI and the next tier cliff. Convert exactly that gap from the rollover IRA to the Roth gold IRA, paying the tax out of after-tax funds (not from the converted balance, which would erode the Roth). Repeat each year until the pre-tax balance produces an acceptable RMD or the retiree turns 65.
5. Confirm the IRS Form 1099-R coding and Form 5498. The conversion is reported on Form 1099-R (Box 1 = gross, Box 2a = taxable, Box 7 = code 2 if under 59½, code 7 if 59½ or older) by the source custodian. The receiving Roth custodian issues Form 5498 the following May confirming the conversion contribution. Both forms must reconcile on the 1040 Line 4 conversion reporting.
6. Direct the dealer on the IRS-approved metals purchase inside the Roth. The metals must meet the fineness standards under IRC §408(m): gold .995+ (American Gold Eagles are an exception named in statute), silver .999+, platinum .9995+, palladium .9995+. Storage is at an IRS-approved depository in segregated or commingled accounts. Home storage was rejected by the Tax Court in McNulty v. Commissioner, 157 T.C. No. 10 (2021), with the entire IRA balance reclassified as a taxable distribution.

Worked example: a $350,000 TSP balance and the IRMAA-aware ladder

Consider a 60-year-old military retiree working in a federal contractor role, single filer. The balance sheet: $350,000 in a consolidated rollover IRA (TSP plus contractor 401(k)), $62,000 in annual DFAS retired pay, $21,000 in annual VA disability (non-taxable), and $90,000 in contractor wages. Five years remain before the Tricare for Life and Medicare transition at 65.

The table compares three planning approaches across the five-year window.

The Step-down strategy is the only path that meaningfully reduces post-65 IRMAA exposure for this fact pattern. The Aggressive path costs nothing extra in conversion tax but locks Tier 2 forever. The Disciplined path costs nothing now but produces an RMD-driven Tier 2 or Tier 3 at 73. The decision is a labor-supply decision more than a tax decision, and it must be settled three to five years before the 65th birthday to give the conversion ladder time to work.

Common mistakes military retirees make at the Tricare and Medicare transition

Five recurring errors appear often enough in military-retiree tax-clinic settings to be flagged in any planning session. Each is documented in IRS examination patterns or in Social Security IRMAA correction filings.

Mistake 1: declining Medicare Part B to avoid the premium. Part B is the gateway to Tricare for Life. A retiree who declines Part B forfeits TFL eligibility entirely under 10 U.S.C. §1086 and is left to cover Medicare-only services and Medicare cost-sharing out of pocket. The premium savings are erased by a single hospital stay.

Mistake 2: converting Roth in the year of a large one-time event. A military retiree who converts $40,000 to Roth in the same year as a property sale, an inherited IRA distribution, or a 1099 contractor close-out can land in Tier 3 or Tier 4 unintentionally. The IRMAA notice arrives 18 months later when the conversion is already irrevocable. Plan the conversion year against every other taxable event in the same calendar year.

Mistake 3: ignoring the SSA-44 life-change exception. When the IRMAA is based on a year the retiree was still working full-time, Form SSA-44 lets the retiree request a recalculation. The recalculation uses a more recent income estimate when retirement income at 65 will be materially lower.

The form requires documentation of the work-stoppage event (separation letter, retirement notice) and an estimate of the current-year MAGI. Filed promptly, it resets the IRMAA to a lower tier for the affected year. SSA-44 is the official form.

Mistake 4: paying the conversion tax out of the converted balance. The Roth conversion check is a gross amount. The receiving Roth must receive the full gross to grow against the conversion-year tax. A retiree who has 22% withholding taken from the conversion ends up with 78% of the dollars in the Roth and a 22% taxable distribution to the IRS. Pay the conversion tax from after-tax cash or from the regular brokerage account, never from the conversion itself.

Mistake 5: assuming Tricare for Life covers what Medicare covers. TFL pays after Medicare on Medicare-covered services. Services Medicare does not cover (most dental, most routine vision, most hearing aids) are not covered by TFL either. The retiree should verify any high-cost procedure against the Medicare Coverage Database at cms.gov before assuming TFL will pay.

Edge cases: CHAMPVA, the VA pharmacy benefit, and spousal coverage timing

Three fact patterns come up often enough in military-retiree planning to merit named procedural notes.

CHAMPVA for dependents. Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA) covers eligible dependents of veterans rated permanently and totally disabled, when those dependents are not eligible for Tricare. CHAMPVA pays primary for the dependent until the dependent ages into Medicare at 65, at which point CHAMPVA becomes secondary to Medicare.

The dependent must enroll in Part B to keep CHAMPVA active, with the same IRMAA exposure as the retiree. The household plan must include the dependent’s MAGI projection.

VA pharmacy benefit alongside TFL. A retiree with a service-connected disability rating may use the VA pharmacy benefit for prescriptions related to the rated condition; Tricare for Life covers prescriptions under the TRICARE Pharmacy Home Delivery and retail network. There is no premium impact from running both benefits in parallel, but the retiree must direct each prescription to the correct system to avoid out-of-pocket double payment. The choice is administrative, not financial.

Spousal coverage and the timing of joint conversions. When both spouses are TFL-eligible and both are 65 or older, the joint return MAGI determines the IRMAA tier for both Part B premiums. A Roth conversion in either spouse’s account pushes the joint MAGI, which means the dollar-for-dollar cost of a misjudged conversion is doubled relative to a single filer.

For couples coordinating dual conversions, the sequencing matters; our SBP and gold IRA coordination guide covers the related survivor-benefit-plan interaction at length.

Frequently asked questions

Do I lose Tricare for Life if I decline Medicare Part B?

Yes. Under 10 U.S.C. §1086, Tricare for Life eligibility requires enrollment in both Medicare Part A and Part B at the time the retiree becomes Medicare-eligible. Declining Part B forfeits TFL coverage entirely. The retiree may later enroll in Part B during a general enrollment period, but the late-enrollment surcharge under 42 U.S.C. §1395r(b) adds 10% to the Part B premium for each 12-month period the retiree was eligible but not enrolled.

Does a Roth conversion count as MAGI for IRMAA?

Yes. The taxable portion of a Roth conversion is reported on Form 1040 Line 4b and is included in adjusted gross income, which is the starting point for MAGI under 42 U.S.C. §1395r(i). The conversion lands in the year of the conversion and affects the IRMAA tier two years later. Roth distributions from a fully qualified Roth IRA (held more than five years, taken after 59½) do not count toward MAGI; this is the long-term planning point.

Can I file Form SSA-44 every year if my income drops?

SSA-44 covers life-changing events that materially reduce income: work stoppage, work reduction, loss of income-producing property, loss of pension income, marriage, divorce, or death of a spouse. A retiree who experiences any of these events can file SSA-44 for the affected year. A gradual income decline that is not tied to a named life event does not qualify; the IRMAA recalculates naturally the following year as the two-year lookback rolls forward.

Does my VA disability compensation count toward IRMAA?

No. VA disability compensation is excluded from gross income under 38 U.S.C. §1131 and does not appear on the 1040 at all. It does not enter MAGI for the IRMAA calculation. The exclusion is unconditional and does not interact with the Part B premium tier in any way. The same is true for Combat-Related Special Compensation under 10 U.S.C. §1413a.

If my gold IRA is mostly physical metal, how does the conversion mechanics work?

The conversion is a dollar event reported on Form 1099-R, not a metal allocation. The custodian sells a portion of the source rollover IRA’s metal at the depository, transfers the cash to the Roth, and the receiving dealer purchases new metal inside the Roth.

The bid-ask spread on the partial sale is the conversion-year friction cost. A dealer who quoted a wide spread at acquisition will show that spread again at every conversion year and every later rebalancing. The dealer choice at acquisition sets the recurring conversion friction.

The planning deliverable is a multi-year income and tax projection through age 78. It lists, year by year: DFAS retired pay with COLA accrual, VA disability stream (non-taxable), projected contractor wages, projected Social Security claim and benefit, and projected Roth conversion sized to a chosen IRMAA tier.

The projection also lists projected pre-tax balance at year-end, projected RMD beginning at the SECURE Act 2.0 age, and projected Part B premium under the two-year MAGI lookback.

The retiree’s CPA confirms the conversion sizing each year. The dealer-selection decision sits underneath the projection: the spread at acquisition is the recurring cost on every future rebalancing transaction. The check on gold IRA dealers is the starting point for that decision, and keeps the account clean for your spouse or heirs.

Sources cited

1. 10 U.S. Code §1086 (Tricare for Life eligibility for Medicare-eligible uniformed services retirees)
2. 42 U.S. Code §1395i-2 (Medicare Part A enrollment and premium rules)
3. 42 U.S. Code §1395r (Medicare Part B premium and IRMAA income-related adjustments)
4. Social Security Administration: Medicare Parts B and D IRMAA premium schedules
5. CMS Fact Sheet: 2026 Medicare Parts B Premiums and Deductibles
6. SSA Form SSA-44 (Medicare Income-Related Monthly Adjustment Amount, Life-Changing Event)
7. 26 U.S. Code §401(a)(9) (Required minimum distribution rules, SECURE Act 2.0 age provisions)
8. 26 U.S. Code §72(t) (Early distribution penalty and exceptions for retirement accounts)
9. 26 U.S. Code §408(m) (IRA precious metals purity requirements)

More on OPRS

• Military pension and RMD tax-stacking guide
• TSP to gold IRA rollover guide for federal employees
• TSP combat-zone tax-exempt contributions: tracking basis at rollover
• Contractor 401(k) and TSP consolidation guide
• SBP Survivor Benefit Plan and gold IRA coordination
• See the dealers OPRS clears and the ones we warn against for 2026