Removing Retirement Money?

[reubenray]

Is there a way to remove some of my retirement money for a down payment without it going toward my yearly income? I am getting a subsidy for the ACA insurance, but it I get more money/income I loose the subsidy. I am 65, but my wife is 60 so no penalties should be involved. She is the only one on the ACA plan.

 

[Gill]

Only if you borrow it as a loan or withdraw from a Roth.
Bruce

 

[reubenray]

Only if you borrow it as a loan or withdraw from a Roth.
Bruce

The money in question is actually in Roth accounts. How would this work?

 

[Gill]

Simply withdraw whatever you wish. It's all tax free.
Bruce



Sent from my iPad using Early Retirement Forum

 

[REWahoo]

Simply withdraw whatever you wish. It's all tax free.
Bruce

His concern isn't about taxes, it's about added income causing him to loose his ACA subsidy.

 

[eta2020]

As far as I know ROTH distributions are not part of MAGI and have no effect on ACA subsidies.

 

[RE2Boys]

See:
https://www.healthcare.gov/income-and-household-information/income/

for what is included in MAGI for ACA purposes. It has a note regarding Roth distributions.

 

[bingybear]

with the OP being 65, I would assume he would be on Medicare. Not sure how the ACA determines subsidy levels when one is not covered by the ACA plan. The link RE2Boys used noted that their income would be needed.

question for the OP, how low do you need to keep your MAGI income?

 

[rodi]

See:
https://www.healthcare.gov/income-and-household-information/income/

for what is included in MAGI for ACA purposes. It has a note regarding Roth distributions.

Here is the money quote from RE2Boys link

Include most IRA and 401k withdrawals. (See details on retirement income in the instructions for IRS publication 1040). Note: Don’t include qualified distributions from a designated Roth account as income.

We're entering the new year with a change to who's on ACA and who's on Medicare... DH starts medicare in January, and our sons and myself will stay on an exchange policy. Covered CA is not making this an easy task to enroll/renew.... probably because the renewal and the change in status fall on the same date.... I'm going to be forced to call and sit on hold to deal with a real person.

 

[Sunset]

with the OP being 65, I would assume he would be on Medicare. Not sure how the ACA determines subsidy levels when one is not covered by the ACA plan. The link RE2Boys used noted that their income would be needed.

he said his wife is 60 and on the ACA plan.

 

[reubenray]

with the OP being 65, I would assume he would be on Medicare. Not sure how the ACA determines subsidy levels when one is not covered by the ACA plan. The link RE2Boys used noted that their income would be needed.

question for the OP, how low do you need to keep your MAGI income?

Around $40,000. I would want to withdraw $10,000 to $15,000. I have a Roth and my wife has a Roth acount.

 

[reubenray]

Here is the money quote from RE2Boys link


We're entering the new year with a change to who's on ACA and who's on Medicare... DH starts medicare in January, and our sons and myself will stay on an exchange policy. Covered CA is not making this an easy task to enroll/renew.... probably because the renewal and the change in status fall on the same date.... I'm going to be forced to call and sit on hold to deal with a real person.

Good luck with that. I had to make the change to Medicare just prior of my wife having a surgical procedure. I wanted to make sure her insurance was not screwed with. She kept the same policy, but the cost doubled, due to me dropping out of Obamacare. I take a cut in SS and had to pay more for supplement insurance also. This is all backwards!!!!!!

 

[mickeyd]

I am getting a subsidy for the ACA insurance, but it I get more money/income I loose the subsidy.

Since the subsidy (taxpayer money) is for those who can not afford the ACA and you are concerned about earning above that, you would be ineligible for free government assistance. That's the way it works, I think.

 

[jw72]

Sorry mickeyd that is not how it works. Someone can have 4 million bucks in the bank getting 1% interest-40K and they would get a big subsidy. Anyone, even rich people can spend down their savings and adjust their income for the "government assistance".
And Roth withdrawal does not count as income. [MOD EDIT] In 2000 my health insurance "paid by myself" IFP plan, 4K deducible 4K OOP was 50 bucks, 16 years later, my deducible and oop is higher and it has gone up 10x. 500.00. People need to adjust income for assistance.

 

[eta2020]

Mickey you should plan ahead You can have well over 5-6 million bucks net worth and collect subsidies and live on 10k plus a month and pay close to 0 in federal taxes.

It is all matter of withdrawing "appropriate" funds at "appropriate" age. IE 60k long term dividends, 30k CD ladder, 30k Roth before age 65 will get you there.

 

[jw72]

Fun to see a thread highest net worth and still getting ACA subsidy.

 

[eta2020]

And if you are crossing ACA subsidy you have a right to make HSA contribution and lower your MAGi .

 

[rodi]

And if you are crossing ACA subsidy you have a right to make HSA contribution and lower your MAGi .

Is this true even if you don't have a HDHP? I thought (could be wrong... it happens a lot) that HSAs were only allowed for HDHPs.

 

[eta2020]

Is this true even if you don't have a HDHP? I thought (could be wrong... it happens a lot) that HSAs were only allowed for HDHPs.

Correct you need to have HDHP.

That gives you 7k wiggle room if you underestimate dividends and interest on CD ladder.

 

[pb4uski]

Around $40,000. I would want to withdraw $10,000 to $15,000. I have a Roth and my wife has a Roth acount.

If you take $10-15k out of your Roth it should not at all affect your wife's ACA
subsidies since Roth distributions are not counted as income for ACA subsidy purposes.

 

[braumeister]

If you take $10-15k out of your Roth it should not at all affect your wife's ACA
subsidies since Roth distributions are not counted as income for ACA subsidy purposes.

I would like to see July 22nd established as a national holiday. The birthday of William Roth who made these accounts possible in the Taxpayer Relief Act of 1997

 

[pb4uski]

Amen... what a great legacy.

 

[sengsational]

If you take $10-15k out of your Roth it should not at all affect your wife's ACA
subsidies since Roth distributions are not counted as income for ACA subsidy purposes.

+1

 

[daylatedollarshort]

Is there a way to remove some of my retirement money for a down payment without it going toward my yearly income? I am getting a subsidy for the ACA insurance, but it I get more money/income I loose the subsidy. I am 65, but my wife is 60 so no penalties should be involved. She is the only one on the ACA plan.

One other possible option is to take some money out of your house until your wife is on Medicare. We have a HELOC we use if we need more after tax cash to keep from going over the ACA cliff in a given year. We pay much less in interest than we gain from the subsidies so it works out for us now as we are both on ACA plans.

We also use an HSA and have a couple of small businesses with expenses that help lower our taxable income.

 

[merlin3942]

The money in question is actually in Roth accounts. How would this work?

Looks like you can just withdraw whatever you need from your ROTH without it having any impact on your MAGI:

Are Roth Distributions Counted Towards MAGI? - Obamacare Facts