Personal Finance Topics / Retirement Investing
No. of Recommendations: 6
I'm doing my taxes. I was doing fine until I had to enter the ACA payments. Apparently, the realized distributions from mom's stuff that I inherited pushed us up high enough that most of the subsidies were clawed-back. Which makes sense. There was a short lag between the stepped-up basis, and my liquidating. So that was "gains". Plus the distributions I realized. And I'll have to realize more next year. Though it looks like I won't have to worry about IRMAA, so I can take somewhat smaller distributions and hopefully not nuke our ACA benefits.
Tricky to manage. Take too little, and when SS comes around we'll be in a higher bracket than we would normally be because of RMDs. Take too much, and the ACA credits get whacked.
This definitely is a first-world problem. Better than not being able to afford medical insurance, or to retire at all.
No. of Recommendations: 1
Replying to myself...
Maybe just realize it all at once and get it over with. A one-time hit, and then ACA for the next three years as normal. Hmmm....
No. of Recommendations: 2
Maybe just realize it all at once and get it over with. A one-time hit, and then ACA for the next three years as normal. Hmmm....Bear in mind, currently ACA premiums are capped at 8.5% of MAGI. That expires in 2025, and if not renewed, we go back to the old way, subsidy cliff at 400% of federal poverty level. $1 under = subsidy, $1 over = no subsidy.
https://www.kff.org/policy-watch/who-might-lose-el...Do we really think the enhanced tax credits will be renewed? It might be best to take the one-time hit.
No. of Recommendations: 0
One concern about that is that I turn 63 next year. I remember reading (intercst?) that your premium for Medicare is set by your income in the year you turn 63. So, if I take the lump-sum next year, that would affect it.
The PTCs may or may not get renewed. I know the Felon wanted to kill the entire program. I assume he still does. However, from what I'm reading, there is a lot of constituent push-back already. Removing the PTCs would be -I think- extremely unpopular. So it might not happen. IIRC, the ACA added 40M people that had insurance. That's 40M voters who would be unhappy. But it still could happen.
Note: I'm only mentioning politics because this is relevant to the PTCs, which is relevant for anyone who retired early (like we did), before being eligible for Medicare. However the tax law shakes-out is extremely relevant.
Thanks for the link. I initially thought the PTCs would evaporate. Didn't realize that the 400% rule would still apply. If we lump sum next year, under that rule, we wouldn't have a subsidy next year. Otherwise, we would because we're below that level normally.
One wrinkle is that I had a stop loss trigger last month. While the cap gains won't be taxable (under $90K ordinary income), it does hit the MAGI, and therefore PTCs. If I lump-sum this year, I think I'd have to pay full premiums.
No. of Recommendations: 0
Following-up on the stop loss sale.
I did have a gain from that. But I could probably sell a loser to offset, as long as it's long-term. I managed to pick two stinkers. They had good stories, but haven't performed to expectation (i.e. they are underwater). I'd have to check my purchase date to make sure they're long term when I sell them, but that would be a good offset to keep MAGI down.
