Author Topic: ACA Subsidy & Retirement Saver's Credit - Leveraging Both?  (Read 1174 times)

tpac

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ACA Subsidy & Retirement Saver's Credit - Leveraging Both?
« on: December 06, 2016, 03:07:02 PM »
Assuming:
(1) You invest more than $2000 / $4000 and are eligible for the max the saver's credit of $1000 / $2000 (individual / joint)
(2) You qualify for ACA subsidies (MAGI above relevant state 100/133/138% FPL min and below 400% FPL subsidy max)
(3) You purchase insurance through the ACA marketplace
(4) You can push your MAGI down to any FPL % in the 100/133/138-400% range with tax advantaged savings

What would be the best balance of the ACA subsidy and the saver's credit?

seattlecyclone

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Re: ACA Subsidy & Retirement Saver's Credit - Leveraging Both?
« Reply #1 on: December 06, 2016, 03:16:37 PM »
I'm not sure I understand the question. The saver's credit is non-refundable, so the best it can do is push your tax down to zero. The ACA subsidies are a refundable credit, so it applies even if your tax was zero already. Why not do both to the maximum extent?

tpac

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Re: ACA Subsidy & Retirement Saver's Credit - Leveraging Both?
« Reply #2 on: December 06, 2016, 03:40:23 PM »
Why not do both to the maximum extent?

My interest is in the most valuable thresholds to clear. 250% is a sweet spot for actually owing enough tax for the saver's credit to be useful. Just under 200% is a sweet spot for accessing the best "enhanced" silver plans via the marketplace. There are also significant ACA subsidy boosts under 150% and again under 138% of FPL. Just trying to resolve which one of those thresholds is the most desirable to clear.

The likelihood is that I will use both to the maximum extent - it'll just be that since the saver's credit is non-refundable the maximum extent will be $0. I filed at ~130% FPL last year and didn't have any use for the saver's credit, but made significantly more this year so I'm curious if I can find a use for it. Since I'm self employed and live very cheaply if I want to reduce my income further it's easy to just stuff more $$$ into my solo 401(k).