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    medicare premium

    For all our talk about retirement has anyone looked at the RMD and it's effect on your medicare premium at age 72? What if anything does this affect your planning?
    LivingAlmostLarge Blog

    #2
    I haven't looked into this yet. It's on the to do list but not at the top yet.
    Steve

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      #3
      Originally posted by LivingAlmostLarge View Post
      For all our talk about retirement has anyone looked at the RMD and it's effect on your medicare premium at age 72? What if anything does this affect your planning?
      Yes. It is one reason I have been working on reducing our future RMDs at age 72. We will pull from pretax for expenses and also do some strategic conversions to Roth.

      The goal is to have a level Medicare premium and a level tax bracket.

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        #4
        It's called IRMMA and it kicks in @ 65 when you start Medicare. It can be quite onerous if your income is high, and RMDs count as income. Between SS, pension and RMD's, I don't have a chance in hades of hitting the first threshold @ $176k for MFJ.

        From medicare.gov (the premium amount is per person)

        The standard Part B premium amount in 2021 is $148.50. Most people pay the standard Part B premium amount. If your modified adjusted gross income as reported on your IRS tax return from 2 years ago is above a certain amount, you'll pay the standard premium amount and an Income Related Monthly Adjustment Amount (IRMAA). IRMAA is an extra charge added to your premium.
        $88,000 or less $176,000 or less $88,000 or less $148.50
        above $88,000 up to $111,000 above $176,000 up to $222,000 Not applicable $207.90
        above $111,000 up to $138,000 above $222,000 up to $276,000 Not applicable $297.00
        above $138,000 up to $165,000 above $276,000 up to $330,000 Not applicable $386.10
        above $165,000 and less than $500,000 above $330,000 and less than $750,000 above $88,000 and less than $412,000 $475.20
        $500,000 or above $750,000 and above $412,000 and above $504.90

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          #5
          corn, I'm guessing the first column is for singles, the 2nd is for married filing jointly. What's the third column?
          Steve

          * Despite the high cost of living, it remains very popular.
          * Why should I pay for my daughter's education when she already knows everything?
          * There are no shortcuts to anywhere worth going.

          Comment


            #6
            While helping my dad build out his retirement plan (just retired last month), I started looking into RMDs.... And woof, I'm gonna do everything I can to avoid it entirely. He's 63 right now, with over $1M in his traditional TSP. He should be able to get it down roughly in half by the time RMDs kick in, which should be enough to keep the RMDs from forcing higher withdrawals than he's planning for. The hint of good news with RMDs is that the first dollars withdrawn from retirement accounts count toward your RMDs, so if you're already withdrawing sufficient funds annually to cover the RMDs, you're good and RMDs are no factor.

            Similar to corn's situation, we'll have pension & eventually SS income, so that'll drive up our taxable income as-is. My plan is to convert DW's TSP account into IRAs, then during a downturn, convert the traditional portion to Roth -- gratefully, her traditional portion is fairly low, only $36k of $160k. Roughly similar plan for myself, though my traditional side is much larger, so I'd have to do it more slowly -- currently $127k of $324k. We shouldn't have a problem converting it all to Roth before RMDs, so gratefully I don't expect it to be a major issue for us.
            Last edited by kork13; 07-10-2021, 12:50 PM.
            "Praestantia per minutus" ... "Acta non verba"

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              #7
              Originally posted by corn18 View Post
              It's called IRMMA and it kicks in @ 65 when you start Medicare. It can be quite onerous if your income is high, and RMDs count as income. Between SS, pension and RMD's, I don't have a chance in hades of hitting the first threshold @ $176k for MFJ.

              From medicare.gov (the premium amount is per person)

              The standard Part B premium amount in 2021 is $148.50. Most people pay the standard Part B premium amount. If your modified adjusted gross income as reported on your IRS tax return from 2 years ago is above a certain amount, you'll pay the standard premium amount and an Income Related Monthly Adjustment Amount (IRMAA). IRMAA is an extra charge added to your premium. [TABLE]
              As you noted--it is the tax year when you are 63 that impacts whether or not you will pay IRMAA at age 65 when you start Medicare. There is a form SSA-44 that can be filed if your income will be lower (at 65) due to certain predefined life changing events (such as retiring) if your expected income will be lower.

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                #8
                Originally posted by disneysteve View Post
                corn, I'm guessing the first column is for singles, the 2nd is for married filing jointly. What's the third column?
                The third column is married filing separately. There is another category in which you are married, filing separately and Married, Filing Separately – Lived Apart All Year

                https://www.smpbenefits.com/assets/u...nts/ssa-44.pdf

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                  #9
                  Originally posted by kork13 View Post
                  While helping my dad build out his retirement plan (just retired last month), I started looking into RMDs.... And woof, I'm gonna do everything I can to avoid it entirely. He's 63 right now, with over $1M in his traditional TSP. He should be able to get it down roughly in half by the time RMDs kick in, which should be enough to keep the RMDs from forcing higher withdrawals than he's planning for. The hint of good news with RMDs is that the first dollars withdrawn from retirement accounts count toward your RMDs, so if you're already withdrawing sufficient funds annually to cover the RMDs, you're good and RMDs are no factor.
                  It's good you are taking a look at this early. The only thing about RMDs is that they increase each year -- so, it isn't too long before your are exceeding the 4% SWR. Sure, you don't have to spend it--but if it is in a taxable account it will might impact your tax plan (dividends and so on) where it doesn't have to....If you get a head start and start converting to Roth like you are planning to do--you have more control over the timing of your distributions.

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                    #10
                    I too am also converting and have converted since our 30s from our 401k to Roth IRA. I know we need some in 401k to cover medical expenses and we do not have a hsa. Never had a HDHP sadly. So I might need some 401k. I'm not sure how much and what is excessive. Is more than $1m excessive?
                    LivingAlmostLarge Blog

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                      #11
                      Originally posted by corn18 View Post
                      It's called IRMMA and it kicks in @ 65 when you start Medicare. It can be quite onerous if your income is high, and RMDs count as income. Between SS, pension and RMD's, I don't have a chance in hades of hitting the first threshold @ $176k for MFJ.

                      From medicare.gov (the premium amount is per person)

                      The standard Part B premium amount in 2021 is $148.50. Most people pay the standard Part B premium amount. If your modified adjusted gross income as reported on your IRS tax return from 2 years ago is above a certain amount, you'll pay the standard premium amount and an Income Related Monthly Adjustment Amount (IRMAA). IRMAA is an extra charge added to your premium.
                      $88,000 or less $176,000 or less $88,000 or less $148.50
                      above $88,000 up to $111,000 above $176,000 up to $222,000 Not applicable $207.90
                      above $111,000 up to $138,000 above $222,000 up to $276,000 Not applicable $297.00
                      above $138,000 up to $165,000 above $276,000 up to $330,000 Not applicable $386.10
                      above $165,000 and less than $500,000 above $330,000 and less than $750,000 above $88,000 and less than $412,000 $475.20
                      $500,000 or above $750,000 and above $412,000 and above $504.90
                      Nice chart ya got there.
                      james.c.hendrickson@gmail.com
                      202.468.6043

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