Any way to "forfeit" income to avoid IRMAA cliff

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eddot98
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Joined: Wed Jan 01, 2014 11:47 am
Location: The Berkshires

Re: Any way to "forfeit" income to avoid IRMAA cliff

Post by eddot98 » Fri Nov 08, 2019 4:45 pm

In 2015 (the year that I turned 65 and filed for Medicare), I had an outside consulting job where I wasn't sure how much I was going to make during the year until the year was over. As it turned out, when I went to do my taxes in 2016 I found that I was going to be slightly into the first married filing jointly IRMAA tier. I was able to open a SEP-IRA, contribute the max, which was only about $3800, and get us under the limit. It was too late to contribute more to my 401k as it was the next year. Since then, we manage our income very closely in order to stay under the limit.
I realize that this solution isn't open to many people, but just thought that I would put it out there.

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FIREchief
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Re: Any way to "forfeit" income to avoid IRMAA cliff

Post by FIREchief » Fri Nov 08, 2019 5:23 pm

I will add that if it becomes inevitable that a person will cross the first IRMAA threshold for a given tax year, the smart thing to do may be to release the brakes and hit the gas on further Roth conversions (or other accelerated income) to take advantage of the remainder of the first IRMAA "bracket." This can help avoid IRMAA in future years.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

smitcat
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Re: Any way to "forfeit" income to avoid IRMAA cliff

Post by smitcat » Fri Nov 08, 2019 6:19 pm

FIREchief wrote:
Fri Nov 08, 2019 5:23 pm
I will add that if it becomes inevitable that a person will cross the first IRMAA threshold for a given tax year, the smart thing to do may be to release the brakes and hit the gas on further Roth conversions (or other accelerated income) to take advantage of the remainder of the first IRMAA "bracket." This can help avoid IRMAA in future years.
Agreed - or any IRMAA threshold. If your best plan crosses any level it is best to maximize that level.

MotoTrojan
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Joined: Wed Feb 01, 2017 8:39 pm

Re: Any way to "forfeit" income to avoid IRMAA cliff

Post by MotoTrojan » Fri Nov 08, 2019 6:20 pm

Pick a volatile stock, go long and short at the same time, and then sell whichever one is down :twisted: :sharebeer .

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