profit sharing Keogh contribution to avoid Medicare IRMMA penalty

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valuegeeek
Posts: 1
Joined: Wed Mar 13, 2019 9:04 pm

profit sharing Keogh contribution to avoid Medicare IRMMA penalty

Post by valuegeeek » Wed Mar 13, 2019 9:44 pm

I'm age 73. I have an LLC as a sole proprietorship. I set up a Profit sharing Keogh last year to in effect be my IRA to reduce my AGI. I contributed to it last year-tax year 2017 to reduce AGI income just under the $170k level to avoid IRMMA penalty. I have no other IRA I am currently contributing to. I also just recently contributed to this same profit sharing Keough for tax year 2018 to get slightly under the 170k AGI income bracket to avoid the IRMMA again. My CPA says he is not sure now that my contributions to a Profit Sharing Keough is exactly the same as contributing to a regular (non roth) IRA. In other words, he now thinks contributing to the Keough wont reduce my AGI thus making my income above the $170k limit and forcing me to pay the IRMMA penalty.

He also thinks that there may be an income limit of 121k to be able to contribute to an profit sharing Keough since I have an old 401k from an old employer that was rolled over to an IRA 10 years ago-which I don't contribute to. I argue that is only applicable if I had a regular company IRA or 401k that I was also currently contributing to. who is correct?

I argue that the profit sharing Keough is the same type of before tax contribution as a non-roth IRA and therefore should count just like contributing to a regular (non roth) IRA. thus reducing my IGA to avoid the IRMMA penalty. Who is correct?

The Wizard
Posts: 13355
Joined: Tue Mar 23, 2010 1:45 pm
Location: Reading, MA

Re: profit sharing Keogh contribution to avoid Medicare IRMMA penalty

Post by The Wizard » Wed Mar 13, 2019 10:37 pm

valuegeeek wrote:
Wed Mar 13, 2019 9:44 pm
...Who is correct?
No idea, but I'd get a good CPA and take his/her advice.

And nothing wrong with paying more due to IRMAA. Many higher income retirees will be doing this indefinitely...
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