Roth IRA Conversions and ACA Income: What You Need to Know
If you’re considering converting your Traditional IRA to a Roth IRA, it’s important to be aware of the potential impact on your Affordable Care Act (ACA) income. While ACA subsidies are based on your household income, not all types of income are treated equally.
Traditional IRA to Roth IRA Conversions and ACA Income
When you convert a Traditional IRA to a Roth IRA, the amount you convert is taxed as income for the year of the conversion. This means that the full amount of the conversion, not just the capital gains, will count as income for ACA purposes.
For example, if you convert $10,000 from a Traditional IRA to a Roth IRA, your ACA income will increase by $10,000. This could potentially affect your eligibility for subsidies or the amount of subsidy you receive.
Reporting Roth IRA Conversions
When reporting a Roth IRA conversion on your ACA application, you should include the full amount of the conversion as income. This includes both the original contribution to the Traditional IRA and any earnings.
You should report the conversion as “Retirement Income” on your ACA application. This is because Roth IRA conversions are considered withdrawals from a retirement account.
Seeking Professional Help
If you’re unsure how a Roth IRA conversion will affect your ACA income, it’s important to speak with a licensed agent or financial advisor at HealthSherpa. They can help you understand the rules and make informed decisions about your health insurance coverage.
Conclusion
Understanding how Roth IRA conversions affect ACA income is essential for making informed decisions about your health insurance coverage. By following these guidelines and seeking professional help when necessary, you can ensure that you’re getting the most out of your ACA benefits.
Question? or Need a Free Quote?
Contact Us
Reach out to us for free expert insurance advice and solutions. We will help you solve ACA (Obamacare) related questions and problems. Will contact you within 24 hours of receiving your message.