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Are Ghost Taxes Creeping Into Your TIAA Retirement Plan?

'Many TIAA employees underestimate how much “ghost taxes” can erode retirement income. Understanding these hidden thresholds today can help you make more thoughtful decisions for tomorrow’s financial well-being,' — Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement.

'Many TIAA employees are surprised by how quickly hidden taxes like AMT, NIIT, and IRMAA can reduce retirement income, making it important for retirees to stay informed and thoughtfully plan so these costs don’t catch them off guard.' — Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

The five “ghost taxes” that may unexpectedly impact retirement income.
How these taxes can affect TIAA employees and retirees.
Strategies to better understand and prepare for these tax implications.

How TIAA Employees Can Prepare for the Five “Ghost Taxes” That Could Haunt Retirement

There are several lesser-known surcharges and thresholds that may unexpectedly increase your tax bill in retirement, even if you already understand federal, state, and local tax obligations. These include the Alternative Minimum Tax (AMT), the Net Investment Income Tax (NIIT), the Medicare Income-Related Monthly Adjustment Amount (IRMAA), the Social Security “tax torpedo,” and the new senior deduction. Because many of these thresholds are not adjusted for inflation, they increasingly impact retirees, including those from TIAA.

1. AMT: Alternative Minimum Tax

The AMT is a parallel tax system designed to make sure higher-income individuals pay at least a minimum amount of taxes. It has its own tax brackets, forms, and rules, with a top rate of 28%. ¹ Some deductions available under the traditional tax system are limited under AMT rules.

For 2025, the AMT exemptions are:

- $88,100 for single filers (phasing out at $626,350)
- $137,000 for married couples filing jointly (phasing out at $1,252,700)

High income, exercising incentive stock options, large capital gains, or numerous itemized deductions may trigger AMT. Even though long-term capital gains receive preferential tax treatment, they can still reduce your AMT exemption. If AMT is paid in one year, a tax credit may be available in future years when AMT is not owed.

2. NIIT: Net Investment Income Tax

The NIIT applies a 3.8% tax on net investment income when modified adjusted gross income (MAGI) exceeds:

- $200,000 for single filers
- $250,000 for married couples filing jointly ²

This tax applies to dividends, interest, rental income, gains from home sales, and capital gains beyond exclusion limits. Withdrawals from 401(k)s and traditional IRAs are not directly taxed by NIIT, but they may increase MAGI and cause other investment income to be taxed.

Strategies to limit exposure include contributing to traditional retirement accounts, using health savings accounts (HSAs), and tax-loss harvesting. For instance, tax-loss harvesting allows you to use up to $3,000 in capital losses annually to offset ordinary income. ³

For individuals age 70½ or older looking to reduce MAGI, qualified charitable distributions (QCDs) may help. QCDs allow you to donate to qualified charities on a tax-free basis directly from your IRA, satisfying required minimum distribution (RMD) rules without bringing distributions into income. In 2025, up to $108,000 may be donated tax-free. ⁴

3. IRMAA: Income-Related Monthly Adjustment Amount

IRMAA adds a surcharge to Medicare Parts B and D premiums for higher-income retirees and is based on MAGI from two years prior.

For 2025, IRMAA applies when MAGI exceeds:

- $106,000 for single filers
- $212,000 for married couples filing jointly

Even a small increase above these limits can place retirees in a higher premium bracket. Tax-exempt interest from municipal bonds is included in MAGI for IRMAA purposes. Premiums and IRMAA can be deducted from Social Security payments or paid directly. Social Security allows individuals experiencing major life changes, such as retirement or death of a spouse, to request revised IRMAA calculations.

4. The Social Security “Tax Torpedo”

Social Security benefits may be taxable depending on “provisional income,” which includes:

- Adjusted gross income
- Non-taxable interest
- One-half of Social Security benefits

If provisional income exceeds:

- $34,000 for single filers
- $44,000 for married couples filing jointly

...then up to 85% of Social Security benefits may be taxable. ⁵

Delaying Social Security up to age 70 increases benefits by 8% per year beyond full retirement age.

5. The 2025–2028 New Senior Deduction

From 2025 to 2028, individuals age 65 and older may qualify for a new senior deduction:

- $6,000 for single filers
- $12,000 for married couples filing jointly

This deduction phases out at:

- $75,000 MAGI for single filers
- $150,000 MAGI for joint filers

This is separate from the standard senior deduction, which currently adds $2,000 for individuals or $3,200 for married couples age 65 or older.

Need Help Navigating These Taxes?

Understanding how AMT, NIIT, IRMAA, Social Security rules, and senior deductions affect retirement income can be complex, especially for TIAA retirees managing pensions, 401(k)s, and other investments. The Retirement Group can help you better understand how these tax considerations relate to your retirement planning. Call (800) 900-5867 for guidance.

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Articles you may find interesting:

Sources:

1. Tax Foundation. “ 2026 Tax Brackets .” 9 Oct. 2025.

2. Gravelle, Jane G., and Don J. Marples. The 3.8% Net Investment Income Tax: Overview, Data, and Policy Options . Congressional Research Service, 30 June 2023, crsreports.congress.gov/product/pdf/R/R41413.

3. IRS. ' Topic no. 409, Capital gains and losses .' 12 Sep. 2025.

4. Wealth Enhancement. ' 7 Tax Moves to Consider Before The End of The Year ,' by Mary Taliaferro, CFP. Nov. 5, 2025.

5. Investopedia. ' Provisional Taxes: What They Are and How They Work ,' by Julia Kagan. 4 Sep. 2025.

How does TIAA-CREF's current approach to retirement benefits reflect the changing landscape of retiree health care support, and what implications does this have for employees planning for their retirement? How can TIAA-CREF employees leverage available resources to ensure that they are maximizing their retirement readiness?

TIAA-CREF is adapting to the evolving landscape of retiree health care by integrating defined contribution retirement and health care plans, thereby increasing benefits while maintaining cost control. This shift is crucial for employees planning for retirement as it allows for more predictable and sustainable benefits management. Employees should leverage TIAA-CREF’s educational resources, online tools, and direct consultation with wealth advisors to maximize their retirement readiness, ensuring they understand how to optimize their savings and benefits.

In what ways has the transition from traditional defined benefit plans to defined contribution plans impacted TIAA-CREF employees in terms of financial security during retirement? What strategies can employees employ to manage their defined contribution savings effectively to ensure they meet their retirement needs?

The transition from defined benefit plans to defined contribution plans at TIAA-CREF has significant implications for financial security during retirement, potentially increasing the responsibility on employees to manage their retirement savings. Employees can enhance their financial security by taking advantage of TIAA-CREF's automatic enrollment, lifestyle funds, and matching contributions strategies. Additionally, they should consider utilizing financial planning services offered by TIAA-CREF to effectively manage and plan their retirement savings.

TIAA-CREF promotes a robust wellness program alongside its retirement benefits. How can the wellness initiatives offered by TIAA-CREF contribute to an employee's overall preparation for retirement? What measures should employees take to integrate wellness into their retirement planning?

TIAA-CREF’s wellness programs are integral to helping employees prepare for retirement by promoting physical and financial well-being. Engaging in these wellness initiatives can lead to reduced long-term health care costs and improve overall health, which is vital for a secure retirement. Employees should actively participate in these programs and integrate wellness into their retirement planning to ensure they remain healthy and financially prepared for their post-working years.

As employees approach retirement, understanding health care costs becomes essential. What resources does TIAA-CREF provide to help employees estimate their future health care expenses, and why is it crucial for employees to factor these costs into their retirement planning?

TIAA-CREF provides several resources to help employees estimate future health care expenses, which is essential for comprehensive retirement planning. Utilizing tools like health savings accounts and retirement health savings plans can aid employees in planning for these costs effectively. Understanding the specifics of Medicare and supplemental insurance options available through TIAA-CREF can also help employees make informed decisions about their health care in retirement.

Facing the challenges of an aging workforce and rising health care costs, how is TIAA-CREF adapting its retiree health care strategies to remain sustainable? What can current employees learn from these changes as they prepare for their future?

Facing an aging workforce and rising health care costs, TIAA-CREF is adapting its strategies by shifting towards health reimbursement arrangements (HRAs) and providing access to Medicare Advantage plans through private exchanges. These changes help sustain the financial viability of retiree health benefits. Employees should stay informed about these shifts and plan accordingly to utilize the evolving benefits effectively as they prepare for retirement.

The retirement health savings plan (RHSP) at TIAA-CREF offers unique benefits. How does this plan specifically support employees in managing their health care costs post-retirement, and what should employees consider when contributing to this plan while employed?

TIAA-CREF’s RHSP offers unique benefits by allowing employees to save for health care costs with tax advantages. Understanding and contributing to this plan during their employment can significantly aid employees in managing health care expenses post-retirement. Employees should consider maximizing their contributions to take full advantage of TIAA-CREF’s matching offerings and the tax-free growth of these assets.

TIAA-CREF has moved towards providing financial support for retirees through health reimbursement arrangements (HRAs) instead of traditional retiree health benefits. What should TIAA-CREF employees know about the HRA structure, and how can they plan to utilize these funds effectively to cover medical expenses in retirement?

TIAA-CREF’s move to provide financial support through HRAs instead of traditional health benefits requires employees to understand the structure and benefits of HRAs. Planning how to use these funds effectively, including covering medical expenses and insurance premiums in retirement, is crucial. Employees should educate themselves about the terms and optimal uses of their HRA to maximize its value for their retirement health care needs.

Considering recent changes in accounting standards like FAS 106, how has TIAA-CREF adjusted its benefits structure? How can employees understand the implications of these standards when it comes to their retiree benefits and overall financial planning?

With changes in accounting standards like FAS 106 affecting the reporting and funding of retiree benefits, TIAA-CREF has adjusted its benefits structure accordingly. Employees need to understand these changes and their implications on their retiree benefits to plan their finances and retiree benefits more effectively. Awareness of these accounting standards and proactive engagement with HR can help employees navigate these changes.

The rising costs of health care naturally impact retirement planning. How is TIAA-CREF preparing its employees to navigate these rising costs in their retirement? What proactive steps should employees take to mitigate health care costs during their retirement years?

TIAA-CREF is preparing employees for rising health care costs by providing tools and resources to estimate and manage these expenses effectively. Employees should proactively use these resources and consider increasing their health savings contributions to mitigate the impact of medical inflation on their retirement savings.

If TIAA-CREF employees have further questions or need detailed information regarding their retirement benefits, what is the best way to contact TIAA-CREF for assistance? What resources are available through TIAA-CREF's communication channels to ensure employees have comprehensive support during their retirement planning process?

For TIAA-CREF employees seeking further assistance or detailed information regarding their retirement benefits, contacting TIAA-CREF through their dedicated support channels, including customer service lines and online portals, is advisable. Utilizing workshops, webinars, and one-on-one advisement can also provide comprehensive support and guidance in navigating retirement planning effectively.