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Old 04-16-2016, 07:46 AM
 
Location: Central Massachusetts
4,800 posts, read 4,850,322 times
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Quote:
Originally Posted by GeoffD View Post
That is extremely useful information. I expect to see a dramatic reduction in income the day I stop working. I was concerned that since I'm a 5%er filing single, I'd get slaughtered on Medicare premiums for a couple of years. It's another piece of the puzzle in trying to decide if I'm going to try to shift IRA/401(k) money to a Roth IRA once I stop working.
If you are still working and plan on converting, I hope you have already begun putting new monies into Roth and less into tIRA/t401k. Each time you make a conversion to Roth you will be generating income so that will raise taxes.
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Old 04-16-2016, 08:03 AM
 
Location: Idaho
1,455 posts, read 1,156,015 times
Reputation: 5500
Quote:
Originally Posted by mathjak107 View Post
YES !

we won , but not on the grounds i was making for our case .

i was arguing that they should not use 2014 tax returns but instead go by 2015 .since we had a one time sale of an asset and no one was on medicare yet or retired .

but she said that because we stopped work in 2015 and saw such a drastic income cut from 2014 that it could be considered a life changing event and ruled in our favor . she reduced us by almost 300 a month and will give us back the almost 900 we already over paid.
It was quite quick and easy for us to appeal my husband's medicare part B premium based on 2014 income.

We walked in a SS office (without an appointment). All we had to do is to submit the form with the proof of my work stoppage in 2015. The SS rep entered the info in the system and within 5 minutes, we were done.

I'm not sure whether we will have to do the same for next year when the premium will be determined based on our 2015 income (which was quite high with the severance payment paid in November). I'm saving my proof of 2015 work stoppage in the case we need to appeal 2017 premium.
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Old 04-16-2016, 03:51 PM
 
10,604 posts, read 14,208,493 times
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Not my expertise but isn't that a qualified life changing event from the list anyway?

Or was it just that the year was in question?
  • Death of Spouse
  • Marriage
  • Divorce or annulment
  • Work reduction
  • Work stoppage
  • Loss of income from income-producing property
  • Loss or reduction of certain forms of pension income.
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Old 04-16-2016, 04:01 PM
 
71,651 posts, read 71,777,271 times
Reputation: 49241
loss of an income property by their definitions does not mean selling it . they define loss of income from the property as arson , theft , fraud , gov't take over etc . i was hoping loss of income meant the income flow stopped because it was sold but that is not what they mean by loss .

work stoppage wasn't much of an issue by itself since by itself the asset sale put us in the increased premium zone ..

we could not have worked all of 2014 and we still would have triggered the premium increase and had income in that top range .

there really was no "listed reason " for us winning other then she just felt sorry for us i guess since the difference between 2014 and 2015 was 6x the income .
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Old 04-16-2016, 04:03 PM
 
13,923 posts, read 7,416,674 times
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Quote:
Originally Posted by golfingduo View Post
If you are still working and plan on converting, I hope you have already begun putting new monies into Roth and less into tIRA/t401k. Each time you make a conversion to Roth you will be generating income so that will raise taxes.
I don't have the easy options.

My employer doesn't offer a Roth 401(k). I ran down that path in December because the enrollment form from the financial services company has a Roth 401(k) checkbox. Nope.

I earn too much to open a Roth IRA in the traditional way.

As I understand it, you can't do a backdoor Roth if you have an existing IRA. I have some IRA money and a 401(k) from a previous employer that was terminated I need to deal with first before thinking about doing a backdoor Roth. If I can't roll all of that into my employer's 401(k), I have no interest in paying 28%/33% bracket Federal income taxes on it to roll it to a Roth IRA. I'm better off leaving it tax deferred until I stop working and I'm in a lower tax bracket.
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Old 04-16-2016, 04:10 PM
 
10,604 posts, read 14,208,493 times
Reputation: 17203
Quote:
Originally Posted by mathjak107 View Post
loss of an income property by their definitions does not mean selling it . they define loss of income from the property as arson , theft , fraud , gov't take over etc . i was hoping loss of income meant the income flow stopped because it was sold but that is not what they mean by loss .

work stoppage wasn't much of an issue by itself since by itself the asset sale put us in the increased premium zone ..

we could not have worked all of 2014 and we still would have triggered the premium increase and had income in that top range .

there really was no "listed reason " for us winning other then she just felt sorry for us i guess since the difference between 2014 and 2015 was 6x the income .
So in other words she qualified you based on "income reduction". Not literally "work stoppage/reduction" although on paper it would look the same more or less.

Awesome.
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Old 04-16-2016, 04:13 PM
 
Location: Idaho
1,455 posts, read 1,156,015 times
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Quote:
Originally Posted by GeoffD View Post

As I understand it, you can't do a backdoor Roth if you have an existing IRA. I have some IRA money and a 401(k) from a previous employer that was terminated I need to deal with first before thinking about doing a backdoor Roth. If I can't roll all of that into my employer's 401(k), I have no interest in paying 28%/33% bracket Federal income taxes on it to roll it to a Roth IRA. I'm better off leaving it tax deferred until I stop working and I'm in a lower tax bracket.
GeoffD,

Yes, you can do a backdoor Roth conversion if you have an existing IRA BUT the tax filing is not simple. I did it one year and decided it was not worth it. Maybe a tax accountant could help but I wasn't sure the saving after the fee would be significant.

Now that I am retired, we are taking advantages of our 'low' income year to convert IRAs to ROTH to minimize my husband upcoming RMDs. We took the first step of rollover his 401Ks to traditional IRAs and will convert from tIRAs to ROTHs (especially when the market is down - we will transfer to funds of the same kind so there will be no loss).
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Old 04-16-2016, 04:34 PM
 
71,651 posts, read 71,777,271 times
Reputation: 49241
Quote:
Originally Posted by runswithscissors View Post
So in other words she qualified you based on "income reduction". Not literally "work stoppage/reduction" although on paper it would look the same more or less.

Awesome.
i guess that was her basis , she considered such a drastic change a life changing event
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Old 04-16-2016, 08:10 PM
 
30,126 posts, read 47,353,596 times
Reputation: 16070
Quote:
Originally Posted by mathjak107 View Post
YES !

much to our surprise the examiner at social security/ medicare ruled in our favor and is rolling back marilyns premium by 300 a month .

we won , but not on the grounds i was making for our case .

i was arguing that they should not use 2014 tax returns but instead go by 2015 .since we had a one time sale of an asset and no one was on medicare yet or retired .

the examiner shot that down because they have very strict rules on asset sales as far as what makes for a life changing event and we didn't qualify .

but she said that because we stopped work in 2015 and saw such a drastic income cut from 2014 that it could be considered a life changing event and ruled in our favor . she reduced us by almost 300 a month and will give us back the almost 900 we already over paid.

i did not think we had a chance winning this so i was pleasantly surprised .

that is the advantage of doing some planning , we set a side 2 years of withdrawals in cash prior to retiring so it generated very little taxable income in comparison for 2015 swaying their decision .
Yes...glad it worked out...trying to get my husband to file appeal now that he has closed his Defined benefit plan and rolled it into an IRA--proof he has no working income from that business...
But he is reluctant to do it...
What kind of documentation did you use?

PS--I understand her logic because that is how the law is written...
Retiring/work stoppage or reduction IS allowed reason to cause new valuation of Income and recalculating any need for supplemental premiums...
They weren't looking at how much of a resource reservoir you have available either from the sale of the RE asset or from any other source like accumulated savings...

And let's face it you do have the funds to supplement the income drop from no more salary because of the asset sale that was the reason your wife's Medicare premiums went up in the first place...
But if there is legitimate reason to have it reduced then why not...

I was caseworker for the state of TX for more than 5 yrs...the accurate implementing of state and federal policies regarding how to count income for eligibility drove workers and clients nuts...

Last edited by loves2read; 04-16-2016 at 08:34 PM..
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Old 04-16-2016, 09:08 PM
 
30,126 posts, read 47,353,596 times
Reputation: 16070
Quote:
Originally Posted by mathjak107 View Post
it is going to be an even bigger issue . in 2018 there are more brackets in premiums going in to effect so 2016 income will be used .

for a couple you don't get a jump up until 170k as of now or 85k for a single but that will change .

we don't know the amounts in dollars but since medicare is mostly user funded you will be responsible for a greater share of the payments at lower incomes .

the range of 133k to 160k and 160-214k will get increased . while they may not be typical yearly incomes ranges for most folks they can be easily hit with capital gain sales .

.
ANY year's Meicare premium for anyone is calculated from your MAGI tax amount from two yrs prior...

So yes, 2016 MAGI will be used for anyone who is receiving Medicare in 2018 or who becomes Medicare eligible in 2018...
That is the way the law was written--because it allows some time to get a fixed basis to use...

When you think about it...your 2014 income isn't due until April 15, 2015...that is only 8 mo gap befor Jan of 2016...some people delay filing w/extensions--we always do because we need final K1s for o/g production which never come until later in the filing year...
But we have to send any estimated additional taxes with the extension request by filing deadline 4/15 and then wait until after the final tax documents are completed in like Nov and filed to receive any refund...
For our 2014 filing we overpaid significantly with the estimate because our tax guys weren't sure about the K1s and they said better to overpay than owe a penalty. We had to wait until Feb 2016 to get the refund we were due (with interest)...for 2014... Govt had our money for almost a year...

We also received 3 separate Medicare notification letters for 2016 with different premium amounts
1--used the estimated 2014 MAGI for premium + surcharge
2--recalculated premium + surcharge because of the increase in Medicare for those not on SS when no COLA was required...
3--a slight reduction of premium + surcharge because of final 2014 MAGI which was lower than the estimated MAGI...

Most people don't have those variations because their tax situation isn't that complicated...but from the government's standpoint it probably simplifies their timeline to use MAGI from two yrs prior.

For people whose income was SS and maybe a pension or savings or rental income and they start RMDs--
Be sure to see how your income will impact SS/Medicare two yrs after RMDs kick in...
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