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Old 01-20-2023, 09:26 PM   #21
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So just to be clear, withdrawals from a Roth IRA does NOT count towards IRMAA penalty...Correct?
Correct, if you are over 59.5 and your first Roth was opened more than five years ago.
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Old 01-20-2023, 09:33 PM   #22
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Correct, if you are over 59.5 and your first Roth was opened more than five years ago.
Does a Roth conversion open a new Roth IRA or can I just add to my old Roth?
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Old 01-20-2023, 09:35 PM   #23
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So just to be clear, withdrawals from a Roth IRA does NOT count towards IRMAA penalty...Correct?
Itís not part of your tax return AGI or MAGI.
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Old 01-20-2023, 09:36 PM   #24
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Does a Roth conversion open a new Roth IRA or can I just add to my old Roth?
I believe you can convert into your old Roth IRA.
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Old 01-20-2023, 09:37 PM   #25
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Does a Roth conversion open a new Roth IRA or can I just add to my old Roth?
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I believe you can convert into your old Roth IRA.
Yes, either way works.
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Old 01-20-2023, 09:39 PM   #26
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Thanks guys...I have work to do...
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Old 01-20-2023, 09:41 PM   #27
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Does a Roth conversion open a new Roth IRA or can I just add to my old Roth?
Either way is fine.

Personally I only have one Roth, as it is simpler that way.
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Old 01-20-2023, 10:00 PM   #28
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So just to be clear, withdrawals from a Roth IRA does NOT count towards IRMAA penalty...Correct?
Hey, don't give Congress any ideas...
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Old 01-20-2023, 10:18 PM   #29
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The only thing I get confused about is the 5 year rule after you are already 59 1/2. I think you can withdraw contributions tax free, but you have to wait 5 years before you withdraw earnings within the account tax free. I guess they just go by balance? Don’t know.
If you are over 59.5, but your oldest Roth was opened less than 5 years ago, you can still withdraw, free of tax and penalty, all of your contributions and conversions. Only your earnings would be taxed, but there is no penalty.

The way they determine "contributions, conversions and earnings" is that your withdrawals are ordered. Your first withdrawals are deemed to count against contributions. After your withdrawals exceed your contributions over the years, they are deemed to count against conversions. After that is exhausted, finally, you are deemed to be withdrawing earnings. Very unlikely, IMHO, that one would encounter the tax after 59.5.
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Old 01-20-2023, 11:26 PM   #30
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Does a Roth conversion open a new Roth IRA or can I just add to my old Roth?
If your old Roth is older than 5 years, you can forget about any 5 year rule. Even if you open a new Roth and put the money in it, o ruse the old Roth.
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Old 01-21-2023, 12:09 AM   #31
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If your old Roth is older than 5 years, you can forget about any 5 year rule. Even if you open a new Roth and put the money in it, o ruse the old Roth.
And if you are over 59.5.

I am under 59.5 and my oldest Roth is over 5 years old. However, I must still track the 5 year rule related to conversions.
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Old 01-21-2023, 12:12 AM   #32
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And if you are over 59.5.

I am under 59.5 and my oldest Roth is over 5 years old. However, I must still track the 5 year rule related to conversions.
Right, I was responding to lawman who is over 59.5

Good of you to point it out for the young'uns
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Old 01-21-2023, 03:47 PM   #33
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Hey, don't give Congress any ideas...
Trust me. They've already thought of this.
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Old 01-21-2023, 05:00 PM   #34
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Trust me. They've already thought of this.
Yea, adding "tax free" income like Roth withdrawals to MAGI calculations would be a sneaky/great way to increase stealth taxes* like IRMAA, SS taxation levels, and NIIT. They already add back "tax exempt" items like muni bond interest, so not a big leap.

*a term from retirement guru Bob Carlson.
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Old 01-21-2023, 05:03 PM   #35
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Yea, adding "tax free" income like Roth withdrawals to MAGI calculations would be a sneaky/great way to increase stealth taxes* like IRMAA, SS taxation levels, and NIIT. They already add back "tax exempt" items like muni bond interest, so not a big leap.

*a term from retirement guru Bob Carlson.
IRMAA isnít a tax, itís a reduction of a subsidy.
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Old 01-21-2023, 08:14 PM   #36
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IRMAA isnít a tax, itís a reduction of a subsidy.
IRMAA calculation is derived from IRS Form 1040, you know, a tax return. And the amount is based on your tax return MAGI and your tax filing status - single, MFJ, MSF. You can kid yourself all you want but it is part of our tax system - the very definition of a stealth tax. It is unfortunate that Congress has entwined health care with the income tax system, but it is a fact.
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Old 01-22-2023, 08:51 AM   #37
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IRMAA calculation is derived from IRS Form 1040, you know, a tax return. And the amount is based on your tax return MAGI and your tax filing status - single, MFJ, MSF. You can kid yourself all you want but it is part of our tax system - the very definition of a stealth tax. It is unfortunate that Congress has entwined health care with the income tax system, but it is a fact.
You show how it is calculated, not what it is. IRMAA is a percentage of the Medicare premium. To sum, tax data is used to determine how much the subsidy should be reduced. That last part is hyperbole. Letís move on and stop the thread hijack.
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Old 01-27-2023, 11:11 PM   #38
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lawman,

Two lines of thoughts: first, congratulations on wanting to do your homework now to minimize your IMRAA impact later. I don’t begrudge you that at all.

Second, when I last evaluated 2022 IRMAA tiers for MFJ, the jump in costs into the second tier were roughly $1,500. Which was also roughly a 1% increase in effective tax rate. But it’s also a rounding error for dining out costs for many people at that income level. So is that $1,500 worth the work to avoid it?

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Chris
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Old 01-28-2023, 06:55 AM   #39
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I have been using Income Strategy to figure all this stuff out for me. It's cheep $20 per month and will do like 50,000 different strategy tests in a single run to tell you the best way forward for you. It's worth the $20 per month. The reason I keep it going is that the best strategy changes slightly over time. But at least give it a one month trial. It figures out all the issues of different tax status accounts and distributions, SS, Medicare, different tax scenarios. There is no way you or any advisor can actually figure this out without software. Every case is very different with too many factors to consider. Etc.
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Old 01-28-2023, 08:58 AM   #40
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lawman,

Two lines of thoughts: first, congratulations on wanting to do your homework now to minimize your IMRAA impact later. I don’t begrudge you that at all.

Second, when I last evaluated 2022 IRMAA tiers for MFJ, the jump in costs into the second tier were roughly $1,500. Which was also roughly a 1% increase in effective tax rate. But it’s also a rounding error for dining out costs for many people at that income level. So is that $1,500 worth the work to avoid it?

Best regards,
Chris
BubbaChris, clearing the 2nd to 3rd IRMAA hurdle by $1 would have increased a Medicare premium by $1,460/person for 2022. For a married couple that would be $2900+. In my opinion that is something to avoid.
Even if it takes me 10 hours to figure out how to avoid our IRMAA, my payback rate is $290+ per hour - tax free!
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