One Year or Two? What Splitting a Large IRA Withdrawal Across December and January Saves, and When It Costs More

Published 2026-10-28. Tax year 2026 (the return filed in early 2027).

Is it cheaper to split a large IRA withdrawal across two tax years?

Usually, but not always. Across 16 cases (four retiree households, withdrawals of $30,000, $60,000, $100,000, $200,000), splitting the withdrawal evenly across two tax years cut federal tax plus the IRMAA surcharge in 13 and raised it in 2. The largest saving was $11,056 (Couple, 68 and 66: $42,000 Social Security + $30,000 IRA, $200,000); the largest extra cost was $1,691 (Couple, 68 and 66: $42,000 Social Security + $30,000 IRA, $60,000). Splitting can cost more when Social Security is involved: taking it all at once leaves the other year's income low, so most of that year's benefit stays untaxed, and no more than 85% of the benefit is ever taxable in the big year; splitting makes the benefit taxable in both years. In the costliest case, $71,400 of Social Security was taxable over the two years when split, against $47,650 when taken at once.

Price your own withdrawal: the 2026 IRA and 401(k) withdrawal calculator
Free: the federal and state tax on your withdrawal, on your own income.

The households and the question

Each household has its usual year of income and needs a one-off extra amount from a traditional IRA. Option A takes it all in one tax year; option B takes half on or before December 31 and half from January 1, so it lands on two returns (an IRA distribution is taxed in the year it is paid: IRC §408(d)(1)). Both years are priced on the 2026 law, so the comparison is in today's dollars; the IRMAA surcharge is the one each year's MAGI sets two years later, on the 2026 tiers (SSA POMS HI 01101.020).

• S1: Single, 68: $24,000 Social Security + $20,000 IRA a year.
• S2: Single, 72: $32,000 Social Security + $50,000 IRA a year.
• S3: Couple, 68 and 66: $42,000 Social Security + $30,000 IRA a year.
• S4: Couple, 70 and 70: $50,000 Social Security + $60,000 IRA + $20,000 pension a year.

A negative saving means splitting costs more. "Federal tax, one year" and "split" are the extra federal tax over the two years against two years without the withdrawal.

Why splitting can cost more

Up to 85% of Social Security benefits are taxable, and the taxable part grows with other income between two thresholds (IRC §86; IRS Publication 915). No more than 85% of the benefit is ever taxable, however large the withdrawal. So taking the whole amount in one year caps the benefit's exposure in that year and leaves the other year's income low, with most of its benefit untaxed; splitting raises both years' income and can make the benefit taxable in both. Splitting made more Social Security taxable over the two years in 8 of the 16 cases; in Couple, 68 and 66: $42,000 Social Security + $30,000 IRA, $60,000 it was $71,400 against $47,650. Against that, splitting keeps more of the withdrawal in lower brackets, which wins as the amount grows: the saving from splitting was largest at $200,000 (Couple, 68 and 66: $42,000 Social Security + $30,000 IRA, $200,000).

IRMAA works the other way: a surcharge tier is reached by one year's MAGI, so halving the peak keeps a household under a floor it would otherwise cross. Splitting lowered the surcharge in 7 of the 16 cases (the 2026 tiers). It raised it in 1 (Single, 72: $32,000 Social Security + $50,000 IRA, $200,000): an amount so large that each half still crosses a floor puts two years over it instead of one.

With state tax, every state

Each state adds its own brackets, deductions and retirement exclusions to the same two years. Splitting changed the state tax by more than 50 cents in 495 of the 816 state cases.

For Couple, 68 and 66: $42,000 Social Security + $30,000 IRA, $200,000 the total saving from splitting is largest in New Jersey ($16,626). For Couple, 68 and 66: $42,000 Social Security + $30,000 IRA, $60,000, splitting costs more in 49 of the 51 jurisdictions.

Related: The real tax on a 401(k) withdrawal · Inherited IRA: spread or lump sum · What $1 over an IRMAA tier costs · The Social Security tax torpedo

Download the data

Every case on this page, with its inputs: ira-withdrawal-one-year-or-two-2026.csv (the 16 federal + IRMAA cases) · ira-withdrawal-one-year-or-two-2026-states.csv (the 816 cases with state tax) · ira-withdrawal-one-year-or-two-2026.json (both, CC0). Dollar amounts in USD; a negative saving means splitting costs more.

Questions

Is it better to take a large IRA withdrawal in one year or split it over two?

It depends on the rest of your income. In 13 of the 16 cases computed here, splitting cut federal tax plus the IRMAA surcharge, by up to $11,056. In 2 it cost more, by up to $1,691: retirees whose Social Security is partly taxable can pay more by splitting.

Why would splitting an IRA withdrawal cost more tax?

Because of how Social Security is taxed. No more than 85% of the benefit is taxable however large the withdrawal, so taking it all in one year caps that year and leaves the other year low, with most of its benefit untaxed. Two half-size withdrawals raise both years and can make the benefit taxable in both.

Does splitting a withdrawal help with IRMAA?

Usually: IRMAA tiers read one year's MAGI, so a smaller peak can stay under a tier floor. Splitting lowered the surcharge in 7 of the 16 cases here and raised it in 1, where each half was still large enough to cross a floor, so two years paid it instead of one. The surcharge is paid two years after the income year.

Does the state I live in change the answer?

Sometimes. Splitting cost more in total (federal, state and IRMAA) in 104 of the 816 household-state cases.

Method and sources

Every figure was computed by QuantCalc's open tax engines (federal 2.5.1, state 1.21.2) and the IRMAA module through the household module the free 401(k) withdrawal calculator runs, then recomputed by the C engines behind the federal and state tax APIs, from independently written requests, agreeing to the cent. For each household and amount W: one year = tax(usual income + W) + tax(usual income); split = 2 × tax(usual income + W/2); the saving is one year minus split, for the federal tax, the state tax and the annual IRMAA surcharge (Part B + Part D for each person 65 or older). Joint returns split the IRA money evenly between the spouses on the state return. The sources of the rules this study leans on:

• 26 U.S. Code §408(d)(1): IRA distributions are included in gross income when paid
• 26 U.S. Code § 86
• Publication 915, Social Security and Equivalent Railroad Retirement Benefits
• 26 U.S. Code § 151
• Public Law 119-21 (One Big Beautiful Bill Act), enrolled text
• Rev. Proc. 2025-32: 2026 inflation-adjusted items (incl. One Big Beautiful Bill amendments)
• 2026 Medicare Parts A & B Premiums and Deductibles
• POMS HI 01101.020: IRMAA sliding scale tables
• Instructions for Form 1040 (2025)

What is not modelled

• Both years are priced on the 2026 law, in 2026 dollars. In fact the second year's brackets and thresholds rise with inflation, which makes the second half slightly cheaper in money terms; the senior deduction ends after 2028.
• IRMAA is priced on the 2026 tiers and premiums; the surcharges these years set are paid two years later on tiers not yet published. A life-changing event can also reduce it on appeal.
• The withdrawal is a normal distribution after 59½: no early-withdrawal tax, no withholding effects, no required minimum distribution interaction.
• The money taken early (option B's December half) loses a few weeks of growth; not counted.
• Households are illustrations with the standard deduction; no capital gains, ACA credits or other income that also responds to the withdrawal. The Indiana and Maryland figures include the county income tax at the engine's default county rate (Indiana 1.75%, Maryland 3.12%); other local income taxes (city and school-district taxes, and county taxes in other states) are not included.

An estimate, not tax advice. These are computed examples for the 2026 tax year from QuantCalc's open tax engines (federal 2.5.1, state 1.21.2). Your own return depends on facts these examples do not include. Check any decision with your tax preparer before acting.

@misc{quantcalc2026splitalargeirawithdrawalacrosstwotaxyear,
  title  = {Split a Large IRA Withdrawal Across Two Tax Years or Take It at Once? Federal, Every State and IRMAA (2026)},
  author = {{QuantCalc Research}},
  year   = {2026},
  url    = {https://quantcalc.app/research/ira-withdrawal-one-year-or-two-2026/},
  note   = {Accessed <date>}
}