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Roth withdrawal while on ACA
Old 08-14-2018, 07:32 PM   #1
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Roth withdrawal while on ACA

Hi all! I'm sorry to post this question but I've tried searching on Taptalk to no avail.
I'm in a bind and need to get some money, fast.

I think I can withdraw from my Roth IRA with no impact on ACA MAGI.Is this correct and are there any possible "got ya's" that I need to be aware off?
Thanks
Murf
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Old 08-14-2018, 07:46 PM   #2
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Not enough info. Are you eligible to withdraw from the roths tax free? There are 5 year rules and age considerations.
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Old 08-14-2018, 08:06 PM   #3
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Withdrawals from your Roth IRA are deemed to be done in the following order by law: First, contributions, second, conversions, third, earnings.

In the most probable case, if your net Roth IRA contributions to date are greater than the amount you intend to withdraw, there would be no taxes nor penalties. In this case, the amount withdrawn would also not count against you for ACA MAGI purposes, because you're just withdrawing your own money, so it does not count as income.

If you plan to withdraw enough such that you will exceed all of your Roth contributions to date, then it would depend on if you have any conversions and when those conversions were made. It also might depend on your age, not sure about that.

In any case, you're responsible for reporting the withdrawal on your taxes in Part III of Form 8606. And of course, you're responsible for keeping track of your Roth contributions and conversions so you can properly file taxes in years to come.

Also, you're losing out on tax-free growth on whatever you withdraw over the rest of your lifetime.

Good luck.
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Old 08-14-2018, 08:44 PM   #4
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Sorry for the lack of info. I'm kinda worked up right now.

This is a Roth rollover that has had no contributions for at least 10 years. I am 60 YO and the withdrawal would be less than 10 percent of the total balance.

Is there any other info I need to add?

Thanks again!
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Old 08-14-2018, 09:06 PM   #5
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Here is the kawill table on Roth withdrawals from the fairmark.com site:
Looks like you belong in the last category : > 59.5 y.o. and oldest Roth > 5 y.o.
.........so all distributions are qualified.....no taxes/penalty ......so will not contribute to your income for ACA purposes.

Roth IRA Distribution Table

UNDER AGE 59.5
FIVE YEAR CONVERSION HOLDING PERIOD NOT MET

Contributions: Tax-No Penalty-No
Conversions: Tax-No Penalty-Yes (Taxable Portion)
Conversions: Tax-No Penalty-No (Nontaxable Portion)
Earnings: Tax-Yes Penalty-Yes

UNDER AGE 59.5
FIVE YEAR CONVERSION HOLDING PERIOD MET

Contributions: Tax-No Penalty-No
Conversions: Tax-No Penalty-No (Taxable Portion)
Conversions: Tax-No Penalty-No (Nontaxable Portion)
Earnings: Tax-Yes Penalty-Yes

OVER AGE 59.5
LESS THAN FIVE YEARS SINCE OPENING FIRST ROTH IRA

Contributions: Tax-No Penalty-No
Conversions: Tax-No Penalty-No (Taxable Portion)
Conversions: Tax-No Penalty-No (Nontaxable Portion)
Earnings: Tax-Yes Penalty-No

OVER AGE 59.5
FIVE YEARS OR MORE SINCE OPENING FIRST ROTH IRA

All Distributions Are Qualified

No Taxes
No Penalties

Note: The table is not applicable to timely distributions of excess contributions or return of regular contributions.
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Old 08-14-2018, 10:04 PM   #6
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Quote:
Originally Posted by Murf2 View Post
.....This is a Roth rollover that has had no contributions for at least 10 years. I am 60 YO ....
Quote:
Originally Posted by kaneohe View Post
.....OVER AGE 59.5
FIVE YEARS OR MORE SINCE OPENING FIRST ROTH IRA

All Distributions Are Qualified

No Taxes
No Penalties

Note: The table is not applicable to timely distributions of excess contributions or return of regular contributions.
I think you are home free.
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Old 08-14-2018, 10:36 PM   #7
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I understand you're worked up. I don't know what's going on in your life.

I agree with the others that you'd be OK from an ACA MAGI perspective.

I guess I would encourage you, if you can, to just take a little time to look at your alternatives to see if there is a better one. Maybe you already have.
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Old 08-15-2018, 06:29 AM   #8
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Thank you all very much. I believe you've confirmed what I thought.

I will check out my alternatives, as mentioned.

Thanks again!
Murf
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Old 08-15-2018, 07:36 AM   #9
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Quote:
Originally Posted by Murf2 View Post
Thank you all very much. I believe you've confirmed what I thought.

I will check out my alternatives, as mentioned.

Thanks again!
Murf

Might not apply to you but some alternatives:


take needed monies out of a home equity loan


cash value of a life insurance policy - only the contributions made (not the earnings) would be exempt from MAGI.
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