Ari, good content BUT, I was looking forward to a couple case studies to DETAIL the financial math ROI on ACA subsidy vs. say RMD minimization but skipping the ACA subsidy - ie. Financial cost benefit analysis of creating lower income for a subsidy vs. Minimizimg RMD income and skippimg the subsidy.
@@earlyretirementarifor the next video, please go into the details with multiple examples of cost benefit analysis of "saving now" (ACA subsidies) vs. no subsidies due to ROTH conversions instead to lower large RMDs (saving later)
Last year I still had a couple months of W2 income so I held off on Roth conversions to save with ACA. I am starting Roth conversions this year but I will hold back a bit to get a decent ACA subsidy. Thanks for the video.
People are facing a tough retirement. and it's even harder for workers to save due to low-paying jobs, inflation, and high rents. Now, middle-class Americans find it tough to own a home too, leaving them without a place to retire in.
The increasing prices have impacted my plan to retire at 62, work part-time, and save for the future. I'm concerned about whether those who navigated the 2008 financial crisis had an easier time than I am currently experiencing. The combination of stock market volatility and a decrease in income is causing anxiety about whether l'll have sufficient funds for retirement.
It's recommended to save at least 20% of your income in a 401k.Joseph Nick Cahill taught me to estimate how much you should save based on your age and income. I've been with him for years now and his decades of experience in the markets translate to chunks of value in so many ways! He has upscaled my portfolio and even got me reading self help books haha
Joseph Nick Cahill' is his name. He is regarded as a genius in his area and works for Empower Financial Services. He’s quite known in his field, look-him up on the web
Thank you for this tip. It was easy to find your coach. Did my due diligence on him before scheduling a phone call with him. He seems proficient considering his resume.
Waiting for information like this. Age 59, on aca. Luckily, we have a nice amount in a brokerage account. Withdrawing 3k a month and 2k a month from traditional IRA to live on. We contribute to HSA max and get 10k a year deduction for contributions. We pay zero dollars for health insurance. We show income at around 35k with 60k withdrawals.
Good info. Can I ask how income becomes 35K w/ 60K withdraw? 24K from IRA + Capital gain tax for 36K from stock - 10K HSA max contribution? I'm thinking the same strategy, but need to do Roth conversion while want to take advantage of ACA's subsidy. Thanks.
What if, as a Sub-S corp biz owner, I pay the full ACA premium to reduce income, pocket the subsidy at the 0.085 multiplier, and use the tax refund to fund a Roth conversion? Just a 62 yo MBA with spreadsheet modeling skills.
You guys failed!!! It would have taken 5 mins to put together 2 whiteboard examples.... One showing a low incomer driver vs a high income person. I'm 60 and managing a $2M+ portfolio, and I have my income from interest and capital gains far under the 150% FPL. I'm receiving nearly $24k in free premiums and qualify for the highest Silver plan on the ACA. So I have no deductibles with just $5 and $10 copays for any services. $24,000!!!
Wow! Congrats! Applogies im advance if this is too personal, but approximately how much monthly income dobyou ceate from that $2M+ portfolio? Do you find that you have to supplement your income from savings and dividends with ROTH $s to stay near 150% of FPL?
@@Davek111 yes, and many don’t realize that in many counties HSA eligible plans are on the marketplace, so if you have the cash and a little income you can contribute close to $25k to Roths and HSA as a couple while still getting substantial credits to help make it all work. This year is the end of credits and HSA for me since I turn 65 next month, but I can still fund our Roth IRA’s with the small amount of earned income. Obviously funding a regular IRA would be stupid at our current tax rate of 10%-12%.
Don’t know about a formula, but there is a chart published by the IRS that tells you the percent subsidy based on income. Just look up the IRS instructions for filling out the PTC form. It depends on family size and percent of poverty level, but it looks like it is a progressive chart, so a simple formula won’t work.
Great episode, but I was hoping you'd cover if it's OK/advisable to withdraw from Roth IRA for living expenses to help keep MAGA low enough to qualify for ACA subsidies. Thanks
If one has a High Deductible ACA plan, can qualified $s (IRA / 401K / 403b) be moved to an HSA (ideally the annual max.) without the the move creating a taxible event that would count against your annual subsidy?
You can take a distribution from your IRA and use the proceeds to fund your HSA. It's a "taxable" event but the HSA contribution will cover it. That will be a wash for taxes... you won't owe anything in the end, assuming you're over 59.5 years old. If you are asking if you can take IRA money (which was not taxed originally but will be when you withdraw it) and move it to a HSA (which will not be taxed when you withdraw it) and thereby never incur tax on that IRA money, the answer is no.
Careful....You can't have zero income and still qualify for ACA. Your MAGI has to be at least 100% or 130% (depending on your state) of poverty level to qualify for ACA.....but since you have assets you probably won't qualify for Medicaid. Different states are different depending if they took the expanded Medicaid.
@@go2gym It depends on if your state accepted the medicaid expansion. Assets don't count in expansion states like NY, but do in at least some non-expansion states like Georgia, where assets can't be more than $2,000 to qualify for medicaid. Point was that to qualify for ACA you have to make at least some money. So: look up the requirements of your location before you're locked into making no income for the year.
I currently put in money to my 401k traditional. I’m wondering if there is a certain point that makes sense to do Roth 401k (which my employer offers and still matches) instead to avoid conversions later. I’m married and if we keep going by the time we retire we would have a couple million in each of our traditional 401k.
I am maxing out my 401k pre tax (with employer match) AND 401k Roth. At my current tax rate it does not make sense for me to not take the 401k tax deferral. I will try to reduce that balance with Roth conversions after I retire at a (hopefully) lower rate. Figuring out how much to convert versus taking an ACA subsidy is my next challenge.
I would say that it always makes sense to max out the Roth 401k. If you can max it out, you can save more tax advantaged money than you would on the traditional account because you pay the taxes upfront. A plus, you can roll it into a 5 year old Roth IRA and use the contributions before 59.5 tax and penalty free. If you can live on the contributions, no taxable income = ACA subsidies. Con, you can’t access the gains until 59.5 without penalties. Essentially restricting your available income to contributions only. With a 401k, you can initiate a 5 year roll over ladder to a Roth IRA that includes gains. So if you plan on retiring before 55, you could set yourself up for 5 years of Roth contributions while you start the ladder strategy. The question is how much you can roll over without impacting the ACA subsidies.
My employer matches my Roth 401k contributions and places it in a traditional 401k. My company also allows for after tax 401k contributions that are immediately rolled into a Roth IRA allowing a mega back door Roth scenario. So if you’re well off enough to invest 40k+ a year it can all be done in a Roth account. Wealthy folks do not avoid Roth contributions if they are given the option. I do not know why a middle income person would unless it would really impact their ability to live a comfortable lifestyle.
I'd rather have the extra $1000/mo in my go-go years than $1500/mo in my no-go years. Thus, I'm doing the conversions before age 63 so that I can keep my income low for the couple of years I need ACA subsidies.
Ari, good content BUT, I was looking forward to a couple case studies to DETAIL the financial math ROI on ACA subsidy vs. say RMD minimization but skipping the ACA subsidy - ie. Financial cost benefit analysis of creating lower income for a subsidy vs. Minimizimg RMD income and skippimg the subsidy.
We have more content coming on this! Thank you so much for your patience :)
Hey Paul! We'd love to connect and run scenarios specific to your needs. This comparison is a highly customized process!
Great!
@@Move_HealthI have sent my details to you
@@earlyretirementarifor the next video, please go into the details with multiple examples of cost benefit analysis of "saving now" (ACA subsidies) vs. no subsidies due to ROTH conversions instead to lower large RMDs (saving later)
Last year I still had a couple months of W2 income so I held off on Roth conversions to save with ACA. I am starting Roth conversions this year but I will hold back a bit to get a decent ACA subsidy. Thanks for the video.
Excellent move!!! The money you save today on those premiums is worth far more than the same $ amounts when you hit 70.
Good stuff and Glad you enjoy it!
People are facing a tough retirement. and it's even harder for workers to save due to low-paying jobs, inflation, and high rents. Now, middle-class Americans find it tough to own a home too, leaving them without a place to retire in.
The increasing prices have impacted my plan to retire at 62, work part-time, and save for the future. I'm concerned about whether those who navigated the 2008 financial crisis had an easier time than I am currently experiencing. The combination of stock market volatility and a decrease in income is causing anxiety about whether l'll have sufficient funds for retirement.
It's recommended to save at least 20% of your income in a 401k.Joseph Nick Cahill taught me to estimate how much you should save based on your age and income. I've been with him for years now and his decades of experience in the markets translate to chunks of value in so many ways! He has upscaled my portfolio and even got me reading self help books haha
Impressive! How can I contact this advisor? My portfolio has underperformed, and I need guidance.
Joseph Nick Cahill' is his name. He is regarded as a genius in his area and works for Empower Financial Services. He’s quite known in his field, look-him up on the web
Thank you for this tip. It was easy to find your coach.
Did my due diligence on him before scheduling a phone call with him. He seems proficient considering his resume.
Thanks for the great video, Ari. You and James are the dynamic duo of TH-cam financial content creators!
Our pleasure!
Waiting for information like this. Age 59, on aca. Luckily, we have a nice amount in a brokerage account. Withdrawing 3k a month and 2k a month from traditional IRA to live on. We contribute to HSA max and get 10k a year deduction for contributions. We pay zero dollars for health insurance. We show income at around 35k with 60k withdrawals.
Good info. Can I ask how income becomes 35K w/ 60K withdraw? 24K from IRA + Capital gain tax for 36K from stock - 10K HSA max contribution? I'm thinking the same strategy, but need to do Roth conversion while want to take advantage of ACA's subsidy. Thanks.
@@KK-ix9mf remember standard deduction $29,200
@@KK-ix9mf remember standard deduction $29,200. Subtract from 60k
Can you use a health savings account to pay premiums if you retire early??
What if, as a Sub-S corp biz owner, I pay the full ACA premium to reduce income, pocket the subsidy at the 0.085 multiplier, and use the tax refund to fund a Roth conversion? Just a 62 yo MBA with spreadsheet modeling skills.
You guys failed!!! It would have taken 5 mins to put together 2 whiteboard examples.... One showing a low incomer driver vs a high income person. I'm 60 and managing a $2M+ portfolio, and I have my income from interest and capital gains far under the 150% FPL. I'm receiving nearly $24k in free premiums and qualify for the highest Silver plan on the ACA. So I have no deductibles with just $5 and $10 copays for any services. $24,000!!!
Wow! Congrats! Applogies im advance if this is too personal, but approximately how much monthly income dobyou ceate from that $2M+ portfolio? Do you find that you have to supplement your income from savings and dividends with ROTH $s to stay near 150% of FPL?
Congrats on the $2M portfolio. Are Roth conversions part of your picture?
Agree on the need for some whiteboard examples.
Are you saving $24000 per year or over several years until you are eligible for medicare?
We had this issue, I still have a small amount of PT income of about $20k. So we contributed to Roth and HSA and still qualified for $14k in credits
Well done!!! You should have no problem keeping yourself at the absolute 150% FPL and get the most from the premium subsidy.
@@Davek111 yes, and many don’t realize that in many counties HSA eligible plans are on the marketplace, so if you have the cash and a little income you can contribute close to $25k to Roths and HSA as a couple while still getting substantial credits to help make it all work. This year is the end of credits and HSA for me since I turn 65 next month, but I can still fund our Roth IRA’s with the small amount of earned income. Obviously funding a regular IRA would be stupid at our current tax rate of 10%-12%.
Thanks Ari for the video, it was very helpful!
I'm so glad!
Is there an ACA PTC formula that can be spreadsheeted to calc PTC vs Roth conversion taxes?
Don’t know about a formula, but there is a chart published by the IRS that tells you the percent subsidy based on income. Just look up the IRS instructions for filling out the PTC form. It depends on family size and percent of poverty level, but it looks like it is a progressive chart, so a simple formula won’t work.
Great episode, but I was hoping you'd cover if it's OK/advisable to withdraw from Roth IRA for living expenses to help keep MAGA low enough to qualify for ACA subsidies. Thanks
It’s okay, but not optimal in most cases. Let the Roth IRA grow tax-free!
Did you mean MAGI?
@@heidikamrath1951 Keeping MAGA low is key to getting healthcare subsidies. 😂
@@DillyPuttyKeeping MAGA low is key to EVERYTHING! 💙
If one has a High Deductible ACA plan, can qualified $s (IRA / 401K / 403b) be moved to an HSA (ideally the annual max.) without the the move creating a taxible event that would count against your annual subsidy?
You can take a distribution from your IRA and use the proceeds to fund your HSA. It's a "taxable" event but the HSA contribution will cover it. That will be a wash for taxes... you won't owe anything in the end, assuming you're over 59.5 years old.
If you are asking if you can take IRA money (which was not taxed originally but will be when you withdraw it) and move it to a HSA (which will not be taxed when you withdraw it) and thereby never incur tax on that IRA money, the answer is no.
Careful....You can't have zero income and still qualify for ACA. Your MAGI has to be at least 100% or 130% (depending on your state) of poverty level to qualify for ACA.....but since you have assets you probably won't qualify for Medicaid. Different states are different depending if they took the expanded Medicaid.
Assets don't factor into Medicaid for healthcare, only income. But it does for long-term care.
@@go2gym It depends on if your state accepted the medicaid expansion. Assets don't count in expansion states like NY, but do in at least some non-expansion states like Georgia, where assets can't be more than $2,000 to qualify for medicaid. Point was that to qualify for ACA you have to make at least some money. So: look up the requirements of your location before you're locked into making no income for the year.
I currently put in money to my 401k traditional. I’m wondering if there is a certain point that makes sense to do Roth 401k (which my employer offers and still matches) instead to avoid conversions later. I’m married and if we keep going by the time we retire we would have a couple million in each of our traditional 401k.
If you can get a Roth match, you want to be doing at least some Roth contributions. How much is harder to say.
I am maxing out my 401k pre tax (with employer match) AND 401k Roth. At my current tax rate it does not make sense for me to not take the 401k tax deferral. I will try to reduce that balance with Roth conversions after I retire at a (hopefully) lower rate. Figuring out how much to convert versus taking an ACA subsidy is my next challenge.
I would say that it always makes sense to max out the Roth 401k. If you can max it out, you can save more tax advantaged money than you would on the traditional account because you pay the taxes upfront.
A plus, you can roll it into a 5 year old Roth IRA and use the contributions before 59.5 tax and penalty free. If you can live on the contributions, no taxable income = ACA subsidies.
Con, you can’t access the gains until 59.5 without penalties. Essentially restricting your available income to contributions only.
With a 401k, you can initiate a 5 year roll over ladder to a Roth IRA that includes gains.
So if you plan on retiring before 55, you could set yourself up for 5 years of Roth contributions while you start the ladder strategy. The question is how much you can roll over without impacting the ACA subsidies.
My employer matches my Roth 401k contributions and places it in a traditional 401k.
My company also allows for after tax 401k contributions that are immediately rolled into a Roth IRA allowing a mega back door Roth scenario. So if you’re well off enough to invest 40k+ a year it can all be done in a Roth account.
Wealthy folks do not avoid Roth contributions if they are given the option.
I do not know why a middle income person would unless it would really impact their ability to live a comfortable lifestyle.
I'd rather have the extra $1000/mo in my go-go years than $1500/mo in my no-go years.
Thus, I'm doing the conversions before age 63 so that I can keep my income low for the couple of years I need ACA subsidies.
Great thinking
HSA