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Plan Roth Conversions and IRMAA

 

Gary Jordan
(@gbjordan222)
New Member Customer
Joined: 2 months ago
Posts: 2
Topic starter  

When I have tried running the "Optimize" button on the Plan Roth Conversion page, it appears to ignore my "Maximize IRMAA Bracket" limit. It says that the optimal conversions would include huge conversions in 2022 and 2023, that would go way over my IRMAA limits that I set. My wife turns 63 in 2022, which would establish the first year income level for when she turns 65 in 2024. Does the software recognize that the income earned when you are 63, establishes your first year of IRMAA?


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Stuart Matthews
(@smatthews51)
Member Admin
Joined: 1 year ago
Posts: 230
 

Gary,

When calculating Medicare Part B premiums, PRC does use the 2-year look-back in determining the MAGI; however, I just checked and the Roth conversion algorithm does not. The Roth conversion algorithm is being modified significantly in the 2022 model, so I think I'll defer the fix until then.


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Bill Hines, Retirement Planner
(@hines202)
Trusted Member Customer
Joined: 9 months ago
Posts: 70
 

While we're on the topic, please don't be panicked by the news regarding Roth conversions. Regular conversions will probably go away but not for years (likely ten years). Roth accounts themselves may go away, but existing ones will likely be grandfathered and allowed to remain. It's a good reason to start one now, even if you just move $100 from a traditional 401k or IRA to a Roth to start that 5-year clock ticking.

Back-door and mega-backdoor Roths very well might go away as of 1/1/2022 though, so that means you might have to get strategic in a hurry. I'm not such a big fan of those. They can cause big complications in terms of the pro-rata rule later on - mixing qualified and non-qualified funds together (although there's a way to 'undo that by moving the qualified part to a 401k if the company allows it).

Bill Hines
Investment Advisor/Financial Counselor/Retirement Planner
Emancipare Investment Advisors LLC
https://emancipare.com
bill@emancipare.com


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Jim Boyd
(@boyd620)
Active Member Customer
Joined: 9 months ago
Posts: 6
 

In part related to the topic, I have a question for which I have not seen a response. Specifically:

When I click on the Tabular Projections view, and then click on the Taxes submenu, I see a column labeled "Social Security, Medicare and Net Investment Income Taxes".

I would like to be able to identify/breakdown the annual sum into its components (so I might see the specific IRMAA or NIIT changes which accompany an increase or decrease in taxable income, for an individual year or a number of years.

Any idea how I might accomplish that?

Thanks!


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