I went thru WAHealthplanFinder.org to find a health plan. Does my distributions from my IRAs (one was a 401k that was converted to an IRA when I wanted distributions and the other is a Roth IRA) count as income? It seems to me that those should be counted as savings, not income.

I do collect SSA and a small pension that amounts to $1383.87. They are also counting my $502/month for a total income of $1885.87/month to determine my subsidy.

So, do my distributions from my IRAs count as income when determining what my subsidy should be?


Answer

Taxable income, including social security payments, taxable IRA contributions, and taxable IRA interest aren't deducted from Modified AGI. Your Modified AGI is used to determine subsidies. So yes, these amounts are counted toward your total household income and thus do affect the subsidy amounts you are eligible for.

To clarify, 401k's work different than Roth IRA's.

401k distribution counts towards household income, but that the Roth IRA distribution does not. Contributions work in the exact opposite way, as again, this is all based on if you are getting a deduction (which decreases MAGI) or are claiming taxable income (which increases MAGI).

Rate and Comment on the Answer

Your email address will not be published. Required fields are marked *

1 2 3 4 5

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Jamie Aliperti on

Roth IRA distributions are not taxable. The answer should have said that the 401k distribution should count towards household income but that the Roth IRA distribution should not.

ObamaCareFacts.com on

Thanks I updated the answer to make it more clear. It can be a tongue twister to describe that tax implications of 401k’s and Roth’s, in both cases, for withdrawal and contribution, it has to do with if the income is taxable at that point or not.

Cyrus on

I’m enrolled in a 403b Roth IRA. When I start withdrawing at age 59 1/2, would this count as income or even interest income toward eligibility of Medicaid or on the exchange subsidies?

Giang Le on

I’m 63 retiree and my income is a roll over Ira with social security income. Last year I paid $+231.37 for my premium with $250 deductible and 2250 out of pocket. But this year the price is rocket high $360/56/premium, $1250 Deductible and $5700 out of pocket.. How can I manage my life like that. If I take more on my Ira I will pay more for Health insurance get penalty and my ira end it soon. Needs help for that

Ghassan Abbas on

so if $70K was moved from Traditional IRA to a Roth IRA at the end of the year (2016) and the tax paid separately on this rollover, your MAGI will be affected? why should it, it is unearned income?

Will that $70K, affect Obamacare Health Credit (PTC) received in 2016: Meaning do you have to repay all the PTC credit at tax time (April 15, 2017), since that put you over 400% MAGI?

ObamaCareFacts.com on

In cases where you pay taxes, on earned or unearned income, it counts toward your AGI and MAGI, and thus affects taxes and tax credits.

It is explained well here: https://ttlc.intuit.com/questions/3611494-does-a-401-k-to-ira-rollover-count-as-gross-income-against-my-obamacare-income-and-force-me-to-repay-all-13-000-of-the-government-aid-i-got-for-my-healthcare-premiums.