Roth Conversions
I have a sizable savings but all in a normal IRA. I continue to hear about conversion plans which in my opinion are MYTHS, but I am curious on your opinion. I’m not concerned about RMW’s as I withdrawn
$5k monthly from my IRA. My financial
advisor is great but doesn’t have a tax
expert, but he did advise NOT to take any significant amount in one year, ie to buy a winter condo, but rather just rent even for a month or two, and even it’s $15k or $20k and avoid purchasing.
Do yo agree?
Terry Says
So, here’s the problem. When you take money out of your traditional IRA, it is considered ordinary income. And if you have “too much” income in any one year, your Medicare Part B and D premiums could rise sharply. It’s called IRMAA –the income-related Medicare adjustment. Below, I’ve pasted those brackets for 2026. As you can see, more income substantially increases your monthly premiums. So check your tax bracket, and be careful about withdrawals. And when you do withdraw, be sure to have about 20% withheld for taxes.
If you do a Roth conversion, it means you have a HUGE tax increase in that year — adn it will take about 2 years for them to adjust your Medicare premiums. Then you can request they lower them again, because it was a one-time bump in income. But it will be a hassle! Read this for details: https://www.terrysavage.com/irmaa-increases-medicare-premiums/
PS You need a more sophisticated financial advisor! I assume you’re just dealing with a broker. Please watch this video.
IRMAA Brackets for Single Filers (2024 MAGI)
≤ $109,000: $202.90 (standard, no surcharge)
$109,001 – $137,000: $284.10 Part B, $14.50 Part D
$137,001 – $171,000: $405.80 Part B, $37.50 Part D
$171,001 – $205,000: $527.50 Part B, $60.40 Part D
$205,001 – $499,999: $649.20 Part B, $83.30 Part D
≥ $500,000: $689.90 Part B, $91.00 Part D
irmaa.com
irmaa.com
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IRMAA Brackets for Married Filing Jointly (2024 MAGI)
≤ $218,000: $202.90 Part B, $0 Part D
$218,001 – $274,000: $284.10 Part B, $14.50 Part D
$274,001 – $342,000: $405.80 Part B, $37.50 Part D
$342,001 – $410,000: $527.50 Part B, $60.40 Part D
$410,001 – $749,999: $649.20 Part B, $83.30 Part D
≥ $750,000: $689.90 Part B, $91.00 Part D
