Understanding ACA Income Limits: A Guide for Post-Retirement Withdrawal Strategies


As you prepare for retirement, understanding how your income affects your eligibility for Affordable Care Act (ACA) subsidies is crucial. ACA subsidies can significantly reduce your health insurance costs, so it’s wise to plan your withdrawals accordingly. This blog post will provide practical insights into post-retirement withdrawal strategies that help keep your income below ACA income limits.

ACA Income Limits for Subsidies

ACA subsidies are available to individuals and families with household incomes below a certain threshold. For 2023, the income limit for subsidies is 400% of the Federal Poverty Level (FPL), which translates to:

Individual: $51,520
Family of 2: $82,960

In recent years, the income limit for ACA subsidies has been extended to 150% of FPL for individuals and families below this threshold. The extension is currently set to expire in 2025.

Withdrawal Strategies to Stay Below ACA Limits

To qualify for ACA subsidies, it’s essential to keep your income below the applicable income limit. Here are some withdrawal strategies to consider:

Withdraw from Taxable Accounts: Withdraw funds from taxable brokerage accounts, as these withdrawals are counted as taxable income.
Max Out Retirement Accounts: Contribute the maximum amount allowed to traditional IRAs and 401(k) plans. Contributions to these accounts reduce your current taxable income.
Roth IRA Conversions: Convert traditional IRA funds to Roth IRAs. While conversions are taxable in the year of conversion, they increase your tax-free income in retirement.
Tax Loss Harvesting: Sell stocks that have lost value to offset capital gains and reduce your taxable income.
Charitable Giving: Make charitable donations, as these deductions reduce your taxable income.


Chris and Mary are a retired couple planning to live off their investments. They have $500,000 in their taxable brokerage account and $200,000 in their traditional IRAs.

Chris and Mary want to qualify for ACA subsidies, so they withdraw $30,000 from their taxable account in 2023. This withdrawal brings their taxable income to $48,520, below the ACA income limit for a family of 2.

In addition, Chris and Mary convert $15,000 from their traditional IRA to a Roth IRA. While this conversion will increase their taxable income in 2023, it will lower their taxable income in future years, when they withdraw funds from their Roth IRA.

Seek Professional Guidance

It’s always advisable to consult with a tax professional or financial advisor to determine the best withdrawal strategy for your individual circumstances. They can help you understand the tax implications of various strategies and ensure you make informed decisions that optimize your ACA eligibility and financial well-being.

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