Roth Withdrawal for New Car

[steveark]

I got to drive my daughter in laws Tesla model S. I floored it in performance mode and hung on for dear life, what a rush!

 

[kgtest]

I wonder how the heat factor is in the Tesla. I inly ask because I spent the last day driving a 445HP stingray vette around... Well I should say I drove it to 80 or 90% of its ability. Needless to say the drive back from Ft Lauderdale to West Palm was a hot one. Makes me wondee if tha would be similar in the Tesla. I might have run out of range in the Tesla for all the burnouts 0gs and ridicukous acceleration I was doing. Gues I'll have to rent the Tesla S P100D and see whats up.

Did you get your new car yet Al?

 

[TromboneAl]

Tesla says delivery in early December but probably sooner. It's a Model 3, not a Model X.

On the Roth/Obamacare business, I forget how the timing works.

DW will turn 65 next October (I'm already on Medicare). Her Obamacare subsidy has already been determined for next year, but I forget how it works. If we have a big income this year, would we retroactively have to pay back the subsidy?

 

[pb4uski]

....I see nothing wrong with that at all. ....

I agree... that is the way that Congress wrote the law.

 

[PaddyMac]

On the Roth/Obamacare business, I forget how the timing works.

DW will turn 65 next October (I'm already on Medicare). Her Obamacare subsidy has already been determined for next year, but I forget how it works. If we have a big income this year, would we retroactively have to pay back the subsidy?

FWIW, we are doing the same thing - withdrawing from our Roths to buy a new car, as we don't want to blow the ACA subsidy.

Curious as well as to how that all works from year to year. We got the subsidy for 2018 for the first time, and should be able to get it for 2019 (we are paying full price now, but if we can qualify again, we have another huge tax refund coming in the spring ).

I'm thinking that once I do our tax estimate in a few weeks, if we do qualify, I will sign up for ACA in 2020 and enter a lower income so we will get the subsidy starting in January. I would just hate to have to return it...

 

[aaronc879]

Tesla says delivery in early December but probably sooner. It's a Model 3, not a Model X.

On the Roth/Obamacare business, I forget how the timing works.

DW will turn 65 next October (I'm already on Medicare). Her Obamacare subsidy has already been determined for next year, but I forget how it works. If we have a big income this year, would we retroactively have to pay back the subsidy?

Technically you are required to report a change in income. If you have a subsidy based on expected income of $50K but now you realize you will make $70K then you should report that. If you don't then your actual subsidy will be calculated based on what your income really was. Then they take what you got for a subsidy and subtract what you should have gotten and you have to repay the rest. There is a cap on what you have to pay back though. Not sure what the cap is currently. If you try to reduce your reported income to get a higher subsidy next year they will likely require you to send proof before your coverage will begin.

 

[MRG]

I agree... that is the way that Congress wrote the law.

+1

 

[pb4uski]

.... DW will turn 65 next October (I'm already on Medicare). Her Obamacare subsidy has already been determined for next year, but I forget how it works. If we have a big income this year, would we retroactively have to pay back the subsidy?

Bolded part is not correct... her subsidy has been tentatively determined for next year... for the purpose of advance premium credits to be used to reduce premiums due in 2020.... but when you file your 2020 income tax return there will be a calculation of what your subsidy should have been based on your actual 2020 tax return MAGI.... if the premium tax credits based on your actual income exceeds what you were advanced then the difference will be added to your refund.... if the premium tax credits based on your actual income is less than what you were advanced then you owe the difference (subject to certain constraints).

So if you have more income than what your subsidy is based on, when you file your 2020 income tax return you'll need to pay back some of the advanced premium credits that you received in 2020.

 

[Dtail]

Bolded part is not correct... her subsidy has been tentatively determined for next year... for the purpose of advance premium credits to be used to reduce premiums due in 2020.... but when you file your 2020 income tax return there will be a calculation of what your subsidy should have been based on your actual 2020 tax return MAGI.... if the premium tax credits based on your actual income exceeds what you were advanced then the difference will be added to your refund.... if the premium tax credits based on your actual income is less than what you were advanced then you owe the difference (subject to certain constraints).

So if you have more income than what your subsidy is based on, when you file your 2020 income tax return you'll need to pay back some of the advanced premium credits that you received in 2020.

Agree with the above.
But related to a Silver Plan, if one receives the "cost sharing reductions" upfront based on X MAGI but the actual MAGI ends up higher, then one doesn't have to pay back these reductions.

This would be different than the Premium Tax Credits same type of example.

Is this correct?

 

[pb4uski]

Yes.

 

[TromboneAl]

Thanks. Every year I forget how it works. Next year will be the last, then I can devote my mind to forgetting other things.