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Old 06-23-2016, 05:43 AM   #21
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Hmmm. I reran the ACA quote pretending I was 10 years older and the premiums were about the same. Dang I wonder how much I should worry about insurance. In the first 50 years of my life I have only been to the doctor maybe 3 or 4 times for routine issues. Is this really gonna all of a sudden change during the next 15 years?
DF retired after 46 years at age 65 having only going to a doctor 4 times in his adult life. Just never sick; BP, cholesterol and other #'s great.

He was diagnosed with leukemia 6 months into retirement, passed at age 70.

Plan for the worst.
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Old 06-23-2016, 05:54 AM   #22
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https://www.kitces.com/blog/understa...d-conversions/

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Unlike the 5-year rule for contributions, in the case of conversions, each conversion amount has its own 5-year time period (Treasury Regulation 1.408A-6, Q&A-5(c)), and thus with multiple conversions there may be multiple different 5-year periods underway at once. When withdrawals occur from conversion amounts, they are deemed to be withdrawal on a first-in, first-out basis under IRC Section 408A(d)(4)(B)(ii)(II), which effectively means the oldest conversions (most likely to have finished their 5-year requirement) are withdrawn first, and the most recent conversions are withdrawn last. (Overall, the ordering rules from Roth IRAs stipulate that withdrawals are after-tax contributions first, conversions second, and earnings third.)
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Old 06-23-2016, 08:34 AM   #23
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I am doing the same planning; things to consider...


1.Include taxable income (interest, dividends, etc)

2. the income goal of 62,000 is a 2nd order target. The first order is 62,000 plus deductions; Standard(12,600), Exemptions (8000), HSA (7750, if eligible).

3. consider tax harvesting. Capital gains(which include Qualified dividends) will be tax free up to an income of 75000. You have an opportunity to raise your cost basis by harvesting 10K to 20K of capital gains each year.
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Old 06-23-2016, 07:19 PM   #24
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Thank you everyone for your feedback. Looks like the Roth ordering rules could work well.

May take 32k of contributions out of the Roth accounts for 5 years while at the same time convert $32k from IRA to the Roth. Then in 5 years start taking out the $32k of rollovers for the next 5 years.

This will allow us a 78k income over the 10 years which is fairly close to our 100% safe level. After age 60 more sources start opening up which will allow us to continue with about 80k conservatively.

Thanks for letting spit this out here. Hopefully my brain will rest now.
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Old 06-24-2016, 06:50 AM   #25
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Second this number will go up every year until you both hit 65....you are getting older and insurance gets more expensive. ACA at the lower level drops your out of pocket to a very low number.
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Hmmm. I reran the ACA quote pretending I was 10 years older and the premiums were about the same.
If you receive a subsidy, your portion of the SLCSP premium is capped a percentage of MAGI. Once you hit the cap, premium increases due to age or inflation are absorbed through increased subsidies. The increased subsidy is then applied to the plan you chose keeping your part of the premium in check.
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Old 06-24-2016, 07:55 AM   #26
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If you receive a subsidy, your portion of the SLCSP premium is capped a percentage of MAGI. Once you hit the cap, premium increases due to age or inflation are absorbed through increased subsidies. The increased subsidy is then applied to the plan you chose keeping your part of the premium in check.
My comments about the rising rates refers to the private pay situation, when you are not in a group plan or on ACA you are subjected to paying the current premium rates in MN last year the raise in price was around 40%.

This points out the value of qualifying for even a small ACA subsidy and not going private pay unless you have to. Ergo my advice to the OP to collect some after-tax money to lower his income threshold for ACA. But intstead it looks like he decide to raise his income.
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Old 06-24-2016, 09:14 AM   #27
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My comments about the rising rates refers to the private pay situation, when you are not in a group plan or on ACA you are subjected to paying the current premium rates in MN last year the raise in price was around 40%.



This points out the value of qualifying for even a small ACA subsidy and not going private pay unless you have to. Ergo my advice to the OP to collect some after-tax money to lower his income threshold for ACA. But intstead it looks like he decide to raise his income.

Even with raising my income to 78k and adding 2 children under the age of 26 the premium was unchanged ( $560 month). 👍

I could pile up after tax money but it would cost me a lot in taxes as we are currently in the 25% marginal bracket. We are putting all available money into a 401k, 401a, and DCA.

In retirement we will be in the 15% bracket so the difference pays the extra insurance premiums.
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Old 06-24-2016, 09:26 AM   #28
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I understand your point and you need to do what works for you.As I mentioned the MN private pay costs rose 40% last year and they are already warning to look for more large increases this year.

As longs as you are aware of how it works you can make your own choices.Also HSA money is a below the line deduction for ACA one of the few that are, so keep that in mind.
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Old 06-24-2016, 09:49 AM   #29
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So I'm going to revisit your comment about taxes. This is for myself as much as you because I see ACA in my immediate future.

Take 30K for cash and pay the extra 10% taxes. 3000 bucks.

Now take your pension 22K add the 30K throw in 10 from a Roth which as I understand it is added to ACA income numbers.....your ACA number will be around 32K which would probably put your monthly cost at around 200 bucks roughly and would give you lower deductibles and co-pays.

So roughly 590-200...390 x12 4680 and much less exposure on out-of-pocket expenses.
And you haven't had to start your 72-T.
Right now my insurance comes from our farm C corp..but crop prices are lower and so is our income. We have planned to start SS this fall when my DH is almost 68 and take my spousal at 63..but we are on hold because of how this would mess with our ACA numbers. Again I'm not arguing with you I'm just pointing out how complicated it is.
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Old 06-24-2016, 10:41 AM   #30
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As others have mentioned - have a plan for OOP medical. I averaged the previous years medical expenses, added some to that figure and thought I was good. Last year was my first year on an ACA plan, and first year on a HDHP. My husband had an ER visit that was pricey... my kids had multiple sports injuries, one involving multiple specialists (took a baseball to the eye socket - so facial bone guy, eye guy). We were *just* shy of hitting the very high family deductible.

That said - I'm not planning on hitting max OOP every year... I have a set-aside in savings for OOP and deductible. I refill it as it depletes.... Kind of like a sinking fund for new car or new roof.
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Old 06-24-2016, 11:54 AM   #31
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Thanks ivanfan you are really helping me think through this. I appreciate it!

I will do some more calcs for sure before doing anything.

I was thinking the difference in premiums for 30k less income would be about 456-200=256*12=$3,072 or about 10% which is about the same as the tax hit.
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Old 06-24-2016, 12:13 PM   #32
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Thanks ivanfan you are really helping me think through this. I appreciate it!

I will do some more calcs for sure before doing anything.

I was thinking the difference in premiums for 30k less income would be about 456-200=256*12=$3,072 or about 10% which is about the same as the tax hit.
Don't under estimate the value of lower deductible and max out of pockets. Since I am not on ACA my knowledge is limited. I'm going to direct you to fellow board member FUEGO's blog "the root of good" where he has some articles about not falling off the income cliff for ACA. It will be worth every minute of your time.
My work here is done
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