Personal Finance and Investing

progree

(11,516 posts)

20. Yeah for the ACA. But watch out, your premium subsidy amounts depends on your income ...

Mon Jul 4, 2022, 06:27 PM

Jul 2022

and I'm pretty sure a withdrawal from a Traditional IRA is going to count as income for this purpose. Not 100% sure, but pretty sure.

It was an issue back in my ACA days when I did a Roth conversion -- which is treated in part as a withdrawal from a Traditional IRA -- and I lost my ACA subsidy because of it.

Edited to add -- I bet it affects your SSI benefit too.

As far as I know, withdrawals from traditional IRAs count as income for ALL purposes. As silly as it may seem when all one is doing is just trying to access one's own money FFS!

As you mentioned in your OP, you don't mind paying the regular tax on the withdrawal, since you got a tax break when you deposited money in the 401k. But the "side effects", like those enumerated in post#5, can be overwhelming.

It's why some of us caution that one may actually have a higher EFFECTIVE marginal tax rate in retirement than when one was in the "working young" stage.

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Taxes on IRA withdrawl question [View all] OnionPatch Jul 2022 OP

This message was self-deleted by its author A HERETIC I AM Jul 2022 #1

Generally... no FBaggins Jul 2022 #2

I'm a retired financial advisor. Your response is absolutely correct. BlueBloodedAmerican Jul 2022 #6

Unfortunately I did not refinance. OnionPatch Jul 2022 #9

If you get Social Security you may get taxed more on that. Yonnie3 Jul 2022 #3

I'm not sure if this is what you mean but I can make up to 19K of wages before my SSI is affected. OnionPatch Jul 2022 #17

no, that is not what I meant Yonnie3 Jul 2022 #19

This message was self-deleted by its author Tomconroy Jul 2022 #4

Your actual marginal tax rate could be higher, much higher ... progree Jul 2022 #5

Lots to think about here. OnionPatch Jul 2022 #16

Yeah for the ACA. But watch out, your premium subsidy amounts depends on your income ... progree Jul 2022 #20

Ok, so I just saw at the SSI site that IRA withdraws don't count as income when determining benefits OnionPatch Jul 2022 #22

Please speak with a financial advisor. Phoenix61 Jul 2022 #7

Yes, that's what I was advised but now I have a monthly mortgage OnionPatch Jul 2022 #8

Look At Your Interest Rates.... gainesvillenole Jul 2022 #10

That makes sense OnionPatch Jul 2022 #11

It's a numbers game. Phoenix61 Jul 2022 #12

Thanks. The IRA isn't making anything right now, unfortunately. OnionPatch Jul 2022 #15

The only way to get lower payments would be to refinance Phoenix61 Jul 2022 #18

Thanks, that looks really helpful. OnionPatch Jul 2022 #24

Just brain storming here but could you split the payoff between two years? mitch96 Jul 2022 #13

Thanks. I may do something like this. OnionPatch Jul 2022 #14

About ten or so years ago I asked my financial advisor about PoindexterOglethorpe Jul 2022 #21

Yes, I'm in a similar situation as you were. OnionPatch Jul 2022 #23

There's conventional advice out there that no one should retire with a mortgage. PoindexterOglethorpe Jul 2022 #25