Author Topic: Early retirement - convert IRA to ROTH impact on MAGI health insurance  (Read 1969 times)

Frugal Fannie

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So in regards to funding my early retirement I'm planning to roll over $20K oF my traditional IRA to my ROTH IRA every year then wait 5 years to withdraw so I avoid the 10% penalty. My question is how does this impact MAGI? My goal is to keep MAGI as low as possible so I am eligible for maximum credits when purchasing health insurance. Will the $20,000 I rollover each year be included in my MAGI when it comes to calculating health insurance plan credits?
« Last Edit: January 31, 2017, 07:27:29 AM by Frugal Fannie »

secondcor521

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Re: Early retirement - convert IRA to ROTH impact on MAGI health insurance
« Reply #1 on: January 31, 2017, 09:11:25 AM »
Will the $20,000 I rollover each year be included in my MAGI when it comes to calculating health insurance plan credits?

Yes, it will.

The rollover is taxable income.  It shows up on Form 8606 lines 16 and 18, which flows to line 15b of your 1040, which gets added into your total income on line 22, and then ends up on line 37.  Line 37 is your AGI, which is the basis of, and quite often equal to, your MAGI.

Erica

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Re: Early retirement - convert IRA to ROTH impact on MAGI health insurance
« Reply #2 on: January 31, 2017, 11:30:07 PM »
Trump is on fire, good or bad. He is for Health Savings Accounts. My thinking is not to plan on lowering MAGI just because it won't be there for long anyhow.

The question is how are poor people going to fund their HSA's. Nothing said as of yet. In my mind magi means nothing beyond this year. He's already mentioned axing the individual mandate, that should happen within the next couple of months