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Old 04-17-2016, 03:49 AM
 
71,584 posts, read 71,730,589 times
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Quote:
Originally Posted by loves2read View Post
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...
only documentation i brought was my 2015 return , the k1 from 2014 for the lease right sale , and a news clipping showing our partner bernard spitzer decided to sell and we had no control over the sale date .

my argument was since assets don't count what year the sale took place in was irrelevant . if it was sold in 2012 we wouldn't be having this discussion yet our net worth would be comparable .

while she agreed there was no grounds there for the appeal that she could use . .

the work stoppage alone was iffy since with or without work the sale provided more income then working . but both together provided grounds for such a big reduction in income that it was justified .

i guess once the fact that the property sale does not matter and only the income matters the source of that income becomes irrelevant .

it is like that could have been your income forever as far as they are concerned so in that regard it wasn't a one time thing anymore it was the norm .

so the fact you went from 600k magi to under 100k magi in retirement i guess was a life changing event .

Last edited by mathjak107; 04-17-2016 at 04:41 AM..
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Old 04-17-2016, 05:22 AM
 
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Quote:
Originally Posted by BellaDL View Post
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).
If I stay on-plan, I'm 7 3/4 years away from my planned retirement at age 65 1/2. I'm still completely uncertain about what my 401(k)/IRA/Roth IRA strategy will be. The means-tested Medicare premium problem Mathjack brings up in this thread adds some complexity.

For the next 8 tax filing years, it looks like I'll be in the 28% bracket. I don't think it makes sense to pay 28% tax and risking getting to the 33% bracket moving anything already tax deferred to a Roth IRA. It looks like the best I can do is push ~$50K in after-tax money into a backdoor Roth IRA. Relative to the size of everything else, that doesn't help much. It's unlikely I'd pay much tax on the gain on that $50K. As you say, it's probably not worth it.

With the Mathjack "lifetime event" thing, I don't quite understand the timing. If I retire on a December 31st, can I appeal my means-tested Medicare premium on January 1 or do I have to wait a year? That first year I'm retired, I can make my income look like I'm poverty level if I don't take IRA/401(k) distributions and don't sell anything to have capital gains.
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Old 04-17-2016, 08:23 AM
 
Location: Idaho
1,454 posts, read 1,155,024 times
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Quote:
Originally Posted by GeoffD View Post

With the Mathjack "lifetime event" thing, I don't quite understand the timing. If I retire on a December 31st, can I appeal my means-tested Medicare premium on January 1 or do I have to wait a year?
No, you don't have to wait a year. I retired on November 22 last year. My husband applied for Medicare part B starting April this year. We wanted to submit form SSA-44 (Medicare Income-Related Monthly Adjustment Amount -Life-Changing Event) at the same time with Medicare part B application and was told to wait until we receive the premium notification.

The premium notification came in early April, we went to SS office showed the notification, submitted the SSA-44 form and a proof of my work stoppage. I asked the SS agent what will happen if our actual 2016 income above or below what we estimated. We were told that we will either get a refund or have to pay back more.

The billing came last week with the original premium (I was shocked at first to see the big bill before realizing that it was for 4 months from April 1 to July 31). I will just pay the bill and expect refund from SS. The adjusted premium is based on what we estimated to be 2016 income.

With RMDs and planned converted IRAs, our income will be in the surcharge range a while. We will convert as much IRA amount to ROTH each year to keep our income level below the 28% Federal tax bracket and within the first surcharge bracket ($170K to $214K for married filing jointly).
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Old 04-17-2016, 11:55 PM
 
Location: RVA
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No doubt, once your income is steadily above the $170k surcharge bracket, the value of a Roth conversions are iffy. But it's a nice problem to have!

Where retirement income is solid in the 25% (MFJ) bracket, conversions up to the $170k surcharge are more significant and effective.
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Old 04-18-2016, 07:10 AM
 
30,107 posts, read 47,335,107 times
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Each time someone received a letter with notification of premium amount you are supposed to pay--and every year everyone gets at least the notice for the next year's premium--there is the info that you have 60 days to appeal the accuracy of the adjudged premium---with or without any surcharge...
If we use the date my husband closed his DB plan and retired himself from his self-employment (taxes as earnings) income in March, we have until that date in May to lodge appeal.

The few times I have spoken to someone in the Medicare premium calculation dept, I have found them very easy to talk to...getting someone on the phone is usually the problem...

Thanks for the info Mathjak--
I will discuss this with my husband and try to get him to reconsider making the appeal....

PS from my perspective...one reason to consider moving more money to a Roth is for the value as an inherited investment...
Right now the Roth doesn't have to be pulled out by the new owner within 5 yrs so can be a lifetime growth vehicle...
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Old 04-18-2016, 07:32 AM
 
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what is funny is when we got the letter the top line said your ss benefit will not change .

being this was the first time we got that letter we assumed nothing was changing .

wrong ! the benefit stayed the same but what was left after the premium deduction sure changed .

we realized that 2 days before the deadline when the next letter made it very clear what her net check was going to be lol .
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Old 04-18-2016, 07:35 AM
 
71,584 posts, read 71,730,589 times
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Quote:
Originally Posted by loves2read View Post
Each time someone received a letter with notification of premium amount you are supposed to pay--and every year everyone gets at least the notice for the next year's premium--there is the info that you have 60 days to appeal the accuracy of the adjudged premium---with or without any surcharge...
If we use the date my husband closed his DB plan and retired himself from his self-employment (taxes as earnings) income in March, we have until that date in May to lodge appeal.

The few times I have spoken to someone in the Medicare premium calculation dept, I have found them very easy to talk to...getting someone on the phone is usually the problem...

Thanks for the info Mathjak--
I will discuss this with my husband and try to get him to reconsider making the appeal....

PS from my perspective...one reason to consider moving more money to a Roth is for the value as an inherited investment...
Right now the Roth doesn't have to be pulled out by the new owner within 5 yrs so can be a lifetime growth vehicle...
a non spouse inheriting a roth has 2 choices

Rule 1: The Five Year Rule- Receive the entire distribution by December 31 of the fifth year following the year of the owner's death.

Rule 2: Lifetime Withdrawals- Receive the entire distribution over your life, or over a period not extending beyond your life.[6] These distributions are required minimum distributions (RMD) taken from the IRS Single Life Expectancy (Table 1). [7] The table provides a divisor factor, based on the beneficiary's age. The beneficiary divides this factor into the year end value of the Roth IRA to determine the required minimum distribution. The divisor factor is reduced by 1 for each succeeding year.
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Old 04-19-2016, 03:35 PM
 
15,357 posts, read 17,616,116 times
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Quote:
Originally Posted by mathjak107 View Post
...

yes medicare is income linked .

if you were collecting ss then you still pay the old 104.50 rate as a base rate up to 170k for a couple or 85k for a single since there was no cola's .

they bumped my wife from 104.50 to 389.80 because of our 2014 joint return and that is what we appealed and won .
I am thinking it might be best to file income taxes married/filing separately rather than jointly starting 2-3 years(and continu filing separately) before and during medicare/retirement if this results in staying below the income limits for the 1 spouse that will start medicare (If the higher earning younger spouse's income would push joint income into higher brackets). This way the older spouse stays in a lower bracket and will not get stuck paying higher medicare premium.

Am I thinking correctly mathjak?
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Old 04-19-2016, 03:36 PM
 
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it will not work . they count it the same . married and filing separate are one and the same

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Old 04-19-2016, 04:11 PM
 
13,912 posts, read 7,405,593 times
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Quote:
Originally Posted by mathjak107 View Post
it will not work . they count it the same . married and filing separate are one and the same
I manage my mother's financial affairs. I just filed her 2014 Federal return as Married Filing Separately a year late because her now dead husband didn't file in 2014 and his pathetic attorney/executor had been ignoring my repeated "what about 2014 taxes?" emails. I need to run down to the Social Security office for something else. I can appeal her Medicare payment because her income is below the lowest $85K tier. This information about appeals just saved her $1,300 in Medicare premium payments.

In a related thing, my mom was a state college prof in a Social Security opt-out state. The way I read the law, I thought her state pension was large enough that she wasn't entitled to any of her deceased husband's Social Security check. I just got a Social Security check in the mail and a letter saying Medicare was being deducted. That resolved my wondering why I hadn't seen a bill for her quarterly Medicare payment in mid-March. Every little bit helps. Roughly $4,000/year in Social Security manna from heaven and $1,300 reduction in Medicare premiums down to the minimum. That probably adds another 4 or 5 months to when she projects to run out of money and my sister and I have to start picking up the tab.
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