Thanks for posting this.
I am looking into Roth coversion after ER and how MAGI is calculated for ACA premium.
Looks like municipal bond fund interest is included in MAGI:
" Municipal bonds should be held in taxable accounts but be aware that their tax-exempt interest does count in determining MAGI so you may want to switch to taxable bonds and keep them in your retirement account(s)."
But, Roth conversion income is excluded: (from
www.fairmark.com)
Modified Adjusted Gross Income
"
Exclude Conversion IncomeThere's an additional modification that's made only when you're determining modified AGI for purposes of the Roth IRA. In this case you exclude any income you report as a result of converting a traditional IRA to a Roth IRA. Without his favorable rule, the income reported on the conversion could prevent you from making additional Roth IRA contributions."
If I understand correctly, say my ER income is this: $50,000 Roth conversion and $20,000 municipal bond interest.
I will have:
$70,000 AGI to bring me below 15% tax rate and MAGI for just $20,000?