Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
IRMAA, tIRA, limits & rules questions
Old 02-18-2020, 10:24 AM   #1
Thinks s/he gets paid by the post
Philliefan33's Avatar
 
Join Date: Oct 2014
Posts: 1,176
IRMAA, tIRA, limits & rules questions

I'm working on our 2019 taxes. As of now our AGI is a little bit over the second IRMAA tier. Actually, I haven't been able to find what the IRMAA income levels will be for 2019 (affecting what DH will pay for Medicare part B in 2021), so I am using the 2018 number of $218,000.

We both had fun summer gigs that resulted in W-2 income. Not much, but enough that we can make tIRA contributions to bring our MAGI down below the second tier IRMAA threshold, but only if we are allowed to take the IRA deduction. (edited to clarify: we only had $7 of non-taxable interest, so MAGI for Medicare is essentially the same as AGI for these calculations)

The ability to take the IRA deduction hinges (for us) on whether or not we have a retirement plan at work. That means our current work, not the careers we retired from, correct? The only W-2 income we received in 2019 was from employment that does not offer us a retirement plan. As I understand it, that means I can make a deductible IRA contribution no matter what our total income is.

Does anyone understand it differently?

(*This approach is just kicking the can down the road for us, since once some other income streams and RMDs kick in we will end up paying more IRMAA anyway. I'll have to make a spreadsheet to figure out how to bunch some Roth conversions to lessen the impact, but for this year I want to avoid just barely being in the next IRMAA tier)
__________________

Philliefan33 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-18-2020, 10:34 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Sunset's Avatar
 
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 8,673
I always thought the IRA deduction ability depended solely on income. ??
__________________

__________________
Fortune favors the prepared mind. ... Louis Pasteur
Sunset is offline   Reply With Quote
Old 02-18-2020, 10:46 AM   #3
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 3,971
OP, my impression same as yours

https://www.irs.gov/retirement-plans...duction-limits

Traditional IRAs
Retirement plan at work: Your deduction may be limited if you (or your spouse, if you are married) are covered by a retirement plan at work and your income exceeds certain levels.
No retirement plan at work: Your deduction is allowed in full if you (and your spouse, if you are married) aren’t covered by a retirement plan at work.
kaneohe is offline   Reply With Quote
Old 02-18-2020, 11:59 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 25,134
+1 Since they are not covered by a retirement plan at work then they can contribute and deduct and reduce MAGI.

That said, one thing to consider is that my understanding is that IRMAA will be adjusted for inflation beginning in 2020, so the current 2020 $218k floor for the second tier would will likely be a tad higher than $218k in 2021.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...target 65/35/0 AA TBD
pb4uski is online now   Reply With Quote
Old 02-18-2020, 12:17 PM   #5
Thinks s/he gets paid by the post
Philliefan33's Avatar
 
Join Date: Oct 2014
Posts: 1,176
Quote:
Originally Posted by pb4uski View Post
+1 Since they are not covered by a retirement plan at work then they can contribute and deduct and reduce MAGI.

That said, one thing to consider is that my understanding is that IRMAA will be adjusted for inflation beginning in 2020, so the current 2020 $218k floor for the second tier would will likely be a tad higher than $218k in 2021.


Probably, but what is a tad? Rather than having to guess, Id rather be safely under the 2018 number.

Thanks for the responses. Getting this right will save us hundreds of dollars (for now).
Philliefan33 is offline   Reply With Quote
Old 02-18-2020, 12:31 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 24,694
Quote:
Originally Posted by Philliefan33 View Post
Probably, but what is a tad? Rather than having to guess, I’d rather be safely under the 2018 number.

Thanks for the responses. Getting this right will save us hundreds of dollars (for now).
Well, you can at least use the 2020 number, because that will be lower than the 2021 threshold that applies to you in 2021.

Actually $218K is the 2020 tier 2 number for MFJ IRMAA. You must have mistyped the year above.
__________________
Retired since summer 1999.
audreyh1 is online now   Reply With Quote
Old 02-18-2020, 01:05 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 25,134
Quote:
Originally Posted by Philliefan33 View Post
Probably, but what is a tad? Rather than having to guess, I’d rather be safely under the 2018 number.

Thanks for the responses. Getting this right will save us hundreds of dollars (for now).
Quote:
Originally Posted by audreyh1 View Post
Well, you can at least use the 2020 number, because that will be lower than the 2021 threshold that applies to you in 2021.
Yes, the limits that your 2019 tax return income will be compared to will not be less than the 2020 level of $218k (unless we had negative inflation but I'm not sure if they are allowed to adjust for that). And since you pay the second tier rate if you are $1 over or $50k over, then I would be cautious and just use the 2020 level.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...target 65/35/0 AA TBD
pb4uski is online now   Reply With Quote
Old 02-18-2020, 03:53 PM   #8
Confused about dryer sheets
mapletree's Avatar
 
Join Date: Jan 2020
Posts: 1
Quote:
Originally Posted by Philliefan33 View Post
I'm working on our 2019 taxes. As of now our AGI is a little bit over the second IRMAA tier. Actually, I haven't been able to find what the IRMAA income levels will be for 2019 (affecting what DH will pay for Medicare part B in 2021), so I am using the 2018 number of $218,000.

Please also check on this: MAGI (based on tax return two years prior, or three years if two years prior is unavailable)


https://secure.ssa.gov/poms.nsf/lnx/0601101020
mapletree is offline   Reply With Quote
Old 02-18-2020, 04:30 PM   #9
Thinks s/he gets paid by the post
Philliefan33's Avatar
 
Join Date: Oct 2014
Posts: 1,176
Quote:
Originally Posted by mapletree View Post
Please also check on this: MAGI (based on tax return two years prior, or three years if two years prior is unavailable)


https://secure.ssa.gov/poms.nsf/lnx/0601101020


I (think I) understand how IRMAA works. DH is paying more for part B this year because of our income in 2018.

What I am trying to manipulate is our MAGI for tax year 2019 to avoid paying even more for part B in 2021. Without a deductible IRA contribution, we are over the Tier 2 MAGI. I can get us below the Tier 2 threshold, but not below the first tier. I understand its not a bad problem to have..
__________________

Philliefan33 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
IRMAA...Does the Money Grab Never End? TrvlBug Health and Early Retirement 53 02-27-2020 12:04 PM
Roth conversion with TIRA and non-deductible TIRA fh2000 FIRE and Money 15 10-11-2019 12:07 PM
Noticed more people holding signs "need work or food" rayinpenn Other topics 3 05-03-2015 02:51 PM
TIRA Withdrawl Challanges - Do you know all the rules? rescueme FIRE and Money 1 03-26-2012 10:19 AM
Ally Bank now has TIRA & Roth IRA CD's veremchuka FIRE and Money 0 06-24-2011 04:51 PM

» Quick Links

 
All times are GMT -6. The time now is 06:51 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2020, vBulletin Solutions, Inc.
×