Impact of Roth IRA Conversion on Social Security Benefits and Medicare IRMAA : In this episode of Ask The Hammer, key insights were shared regarding the impact of Roth IRA conversions on Social Security and Medicare's Income-Related Monthly Adjustment Amounts (IRMAA). The discussion focused on a scenario where an individual plans to convert $1.7 million to a Roth IRA over ten years, 15 years before retirement.
Levine emphasized that if Roth conversions are completed more than ten years before receiving Social Security and being affected by IRMAA, there would be no impact on these benefits. Future tax-free distributions from a Roth IRA won't increase income for Social Security taxation or affect Medicare Part B or Part D premiums.
However, Levine cautioned about the timing and size of conversions. Large annual conversions could push an individual into a higher tax bracket, suggesting a need for careful management of tax brackets during the conversion process.
Levine also highlighted a common misconception about tax planning. The goal isn't to minimize taxes in any single year but to achieve the lowest cumulative tax bill over one's lifetime. Overpaying taxes today to eliminate future taxes might not be the best strategy.
#RothIRAConversion #socialsecurity #IRMAA
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