IRMAA and Capital Gains on Home Sale in Retirement

[wildcatsua]

[Split from Subject: IRMAA and Capital Gains on Home Sale in Retirement Planning - moderator Kendall]

We sold our rental home (not our primary residence) in June 2023. MAGI for 2023 was ~$695k. This was a real one off. Our typical MAGI would be ~$150k. I retired in Feb 2024.

Both my wife and I just got notice from SSA that our IRMAA for 2025 is based on our 2023 MAGI. So, between the part B and D it's a hit of ~$500/mo for each of us.

Will an appeal based on my no longer working as of Feb 2024 be successful?

Thank you for any help!

[CAsage]

Your income jumped in 2023, and that's the 2025 IRMAA. I can't see how there was any "life event" like retiring or death in 2023 to justify an appeal for that year. Good news - it will drop again in 2026, based on your 2024 income.
Edit to add: I was wrong, the SSA uses the "best" data on income, and might approve a 2025 based on lower 2024 income. I learn...

[retiredude24]

I retired March 2024 and filed form SSA-44 which is for a life changing event (retirement in my case) in April. You have to provide an estimate of what your modified AGI will be for the the year (2024). IRMMA will be adjusted according to the published thresholds for the year. I went to social security office and filed the SSA-44 in person, not via mail or drop off. Just filed another SSA-44 for 2025 today, same procedure because my 2023 is over the thresholds. As I understand it, you can only file an SSA-44 for 2 years for a specific life changing event. My 2024 tax return will be reported directly to social security by the IRS once I file in 2025. If my actual AGI for 2024 is greater than the IRMMA thresholds I will get a retroactive IRRMA adjustments for 2024. Should mention you have to provide proof of the life changing event. In my case I had obtained a letter from my company HR stating I retired on a certain date.

[WeakOldGuy]

The SSA doesn't care where the income comes from. You had a "life-event" in 2024 when you retired. Use that to fill out form SSA-44. In that form:
Step 1: Check the box "Work Stoppage". Enter the date that you stopped work. In your case it will be 02/xx/24.
Step 2: Enter 2024 for the tax year of the life changing event and enter your actual, or estimated AGI and Tax-exempt interest. If you file the form before you have your 2024 tax return done, enter your best estimate. If at all possible, I'd wait until you file your 2024 return.
Step 3: Will your 2025 income be less than 2024? Answer yes or no and enter your best guess.
Step 4: Provide documentation of both your income and your life-changing event. A written statement from an employer that you retired will work for the life-changing event. Your 2024 1040 would provide the evidence for the income.
Step 5: Sign it and send it.

I took it all to a SSA office and handed it to a SSA employee. Lots of standing in line and waiting, but I knew it was done. Then you just have to wait, a LONG time in my case, for the SSA to let you know about your appeal. For us, they just sent another IRMAA letter like the one you received only with new numbers. You will be paying the IRMAA they informed you of until the appeal is processed, then they will adjust your premium payments or withholding to credit any overpayment.

I see no reason why you would not be successful in your appeal.

[WeakOldGuy]

Your income jumped in 2023, and that's the 2025 IRMAA. I can't see how there was any "life event" like retiring or death in 2023 to justify an appeal for that year. Good news - it will drop again in 2026, based on your 2024 income. Of course anyone can appeal anything - but based on ????

He retired in 2024, not in 2023, so the life-changing event will allow him to use his 2024 income as the basis for his 2025 IRMAA.

[Eagle33]

OP, I agree with WeakOldGuy that you should be successful in lowering your IRMAA. Just be aware to keep your actual 2025 income under the 2025 IRMAA threshold, so 2025 is not a good time to do a massive Roth conversion or sell another highly appreciated investment, etc.

[WeakOldGuy]

OP, I agree with WeakOldGuy that you should be successful in lowering your IRMAA. Just be aware to keep your actual 2025 income under the 2025 IRMAA threshold, so 2025 is not a good time to do a massive Roth conversion or sell another highly appreciated investment, etc.

If the appeal is granted, I'm not really sure it matters. They will use his 2024 MAGA for the 2025 IRMAA determination and then use the 2024 for the 2026 IRMAA determination. His 2025 income will then be used for the 2027 IRMAA going forward. I do think is worthwhile though to look at estimates of the 2027 IRMAA threshholds and try to keep the 2025 income from crossing over the clif.

[lgerla]

The SSA-44 is a redetermination, technically not an appeal.

You have a life changing event that allows you to ask Medicare to disregard your 2023 income and use your projected 2025 income to determine IRMAA for 2025. You must legally attest to your projection. Right now 2024 income has nothing to do with it.

They will use 2024 income as filed to determine 2026 IRMAA. You can and should request redetermination a second time next year based on the same LCE if your projected 2026 income is lower than 2024.

For each SSA-4 that you file, you have to stay within that year's income tiers to maintain the lower or zero surcharge.

[WeakOldGuy]

The SSA-44 is a redetermination, technically not an appeal.

You have a life changing event that allows you to ask Medicare to disregard your 2023 income and use your projected 2025 income to determine IRMAA for 2025. You must legally attest to your projection. Right now 2024 income has nothing to do with it.

They will use 2024 income as filed to determine 2026 IRMAA. You can and should request redetermination a second time next year based on the same LCE if your projected 2026 income is lower than 2024.

For each SSA-4 that you file, you have to stay within that year's income tiers to maintain the lower or zero surcharge.

Doesn't it depend on what year you ask the SSA to consider for the IRMAA determination? On the SSA-44 form, Step 2 reads:

Fill in the tax year in which your income was reduced by the life-changing event and tax-exempt interest income (as used on line 2a of IRS form 1040), and your tax filing status.

Since the OP retired in early 2024, wouldn't 2024 be the year that the income was reduced by the life-changing event?

[Nowizard]

Simple answer is you will be required to pay IRMAA which is based on the year in which you included sale of the rental property.

[TravelforFun]

[quote=WeakOldGuy post_id=8137179 time=1732758614

If the appeal is granted, I'm not really sure it matters. They will use his 2024 MAGA for the 2025 IRMAA determination and then use the 2024 for the 2026 IRMAA determination. His 2025 income will then be used for the 2027 IRMAA going forward. I do think is worthwhile though to look at estimates of the 2027 IRMAA threshholds and try to keep the 2025 income from crossing over the clif.
[/quote]
Some of you are too political. Lol.

TravelforFun

[TravelforFun]

If the appeal is granted, I'm not really sure it matters. They will use his 2024 MAGA for the 2025 IRMAA determination and then use the 2024 for the 2026 IRMAA determination. His 2025 income will then be used for the 2027 IRMAA going forward. I do think is worthwhile though to look at estimates of the 2027 IRMAA threshholds and try to keep the 2025 income from crossing over the clif.

Some of you are too political. Lol

TravelforFun

[cowdogman]

Good thread.

We sold our house in 2024 with a large gain and we both retired in 2024.

We each ran our own business (LLC and sole proprietorship, respectively) and so I'm wondering what evidence we can use to show that we retired in 2024.

I'm thinking I should terminate the business licenses this year (if that is possible) and, of course, keep any paperwork reflecting that. I can also dissolve the LLC this year. Any 2024 business tax form could also reflect the business closed (I believe there is a checkbox for that on the form).

Anything else we could use as evidence?

[WeakOldGuy]

Good thread.

We sold our house in 2024 with a large gain and we both retired in 2024.

We each ran our own business (LLC and sole proprietorship, respectively) and so I'm wondering what evidence we can use to show that we retired in 2024.

I sold my half of a PLLC to my partner. The sales agreement would have worked fine.

However, I files the SSA-44 form base in a reduction of work hours. 2023 I reduced my work days from 5 days/week to 3 days per week. That was a qualifying life-changing event. That meant the they used my estimated 2023 income to reduce my IRMAA for 2024 instead of the 2022 income when besides working more, we also did over $100k in Roth conversions.

All I did was sign a statement that I reduced my work hours in 2023. When my taxes were done for 2023 I sent a copy of my 1040 to the SSA.

So I think that a statement, signed by you that you sold your businesses would be adequate. You would estimate your income and then send your 2025 income tax to them when completed. That return would then confirm your income reduction as well as the absence of the business incomes in your return would support that you ended you businesses.

[cowdogman]

Good thread.

We sold our house in 2024 with a large gain and we both retired in 2024.

We each ran our own business (LLC and sole proprietorship, respectively) and so I'm wondering what evidence we can use to show that we retired in 2024.

I sold my half of a PLLC to my partner. The sales agreement would have worked fine.

However, I files the SSA-44 form base in a reduction of work hours. 2023 I reduced my work days from 5 days/week to 3 days per week. That was a qualifying life-changing event. That meant the they used my estimated 2023 income to reduce my IRMAA for 2024 instead of the 2022 income when besides working more, we also did over $100k in Roth conversions.

All I did was sign a statement that I reduced my work hours in 2023. When my taxes were done for 2023 I sent a copy of my 1040 to the SSA.

So I think that a statement, signed by you that you sold your businesses would be adequate. You would estimate your income and then send your 2025 income tax to them when completed. That return would then confirm your income reduction as well as the absence of the business incomes in your return would support that you ended you businesses.

Thanks very much.

So, when would I file the SSA-44?

I stopped working early this year. My wife stopped about a month ago. I can wind up my business by the end of this year--dissolve PLLC, cancel business license--but I probably won't wind up her business until early in 2025 (after she has contributed to her solo 401(k)).

I'm new to this having just turned 65 last month.

Happy Thanksgiving!

P.S., my goal is to have the SSA ignore our 2024 income.

[LotsaGray]

Your income jumped in 2023, and that's the 2025 IRMAA. I can't see how there was any "life event" like retiring or death in 2023 to justify an appeal for that year. Good news - it will drop again in 2026, based on your 2024 income. Of course anyone can appeal anything - but based on ????

I believe the life event needs to be subsequent to the income being used. So the 2024 retirement would mean the 2023 income was not representative of 2025.

[WeakOldGuy]

I sold my half of a PLLC to my partner. The sales agreement would have worked fine.

However, I files the SSA-44 form base in a reduction of work hours. 2023 I reduced my work days from 5 days/week to 3 days per week. That was a qualifying life-changing event. That meant the they used my estimated 2023 income to reduce my IRMAA for 2024 instead of the 2022 income when besides working more, we also did over $100k in Roth conversions.

All I did was sign a statement that I reduced my work hours in 2023. When my taxes were done for 2023 I sent a copy of my 1040 to the SSA.

So I think that a statement, signed by you that you sold your businesses would be adequate. You would estimate your income and then send your 2025 income tax to them when completed. That return would then confirm your income reduction as well as the absence of the business incomes in your return would support that you ended you businesses.

Thanks very much.

So, when would I file the SSA-44?

I stopped working early this year. My wife stopped about a month ago. I can wind up my business by the end of this year--dissolve PLLC, cancel business license--but I probably won't wind up her business until early in 2025 (after she has contributed to her solo 401(k)).

I'm new to this having just turned 65 last month.

Happy Thanksgiving!

P.S., my goal is to have the SSA ignore our 2024 income.

If you file the SSA-44 based on your ending your business at the end of 2024, The date that he life changing event would have effected your income could be considered to be 01/01/2025. When I did my work reduction in 2023, I started that reduction in January. So 2023 was the year that the event effected my income. You could let the Sec of State know that your PLLC will be ending 12/31/24. File the SSA-44 in January giving them an estimated income figure for 2025. FWIW, if you are filing jointly, your life-changing event counts for both of you. You both file the SSA-44 form based on your event.

[cowdogman]

Thanks very much.

So, when would I file the SSA-44?

I stopped working early this year. My wife stopped about a month ago. I can wind up my business by the end of this year--dissolve PLLC, cancel business license--but I probably won't wind up her business until early in 2025 (after she has contributed to her solo 401(k)).

I'm new to this having just turned 65 last month.

Happy Thanksgiving!

P.S., my goal is to have the SSA ignore our 2024 income.

If you file the SSA-44 based on your ending your business at the end of 2024, The date that he life changing event would have effected your income could be considered to be 01/01/2025. When I did my work reduction in 2023, I started that reduction in January. So 2023 was the year that the event effected my income. You could let the Sec of State know that your PLLC will be ending 12/31/24. File the SSA-44 in January giving them an estimated income figure for 2025. FWIW, if you are filing jointly, your life-changing event counts for both of you. You both file the SSA-44 form based on your event.

Thanks. This thread has been immensely helpful to me.

If I understand the above posts correctly, I should:

1. Wrap up both businesses at the end of 2024 (12/31 or as close as possible).

2. Wait for my 2024 1040 to be filed.

3. Complete the SSA-44 as follows:

Step 1: Work Reduction--should I put 12/2024 or 1/2025?

Step 2: Tax Year: 2024; AGI: Our actual 2024 AGI; TEI: Our actual 2024 TEI; Tax Filing Status: MFJ

Step 3: Tax Year: 2025; AGI: Our Estimated 2025 AGI; TEI: Our estimated 2025 TEI; Tax Filing Status: MFJ

Step 4: 2024 1040 and various government documents reflecting the closing of the businesses.

4. Make an appointment at an SS office and deliver the SSA-44 and attachments in person.

Is that right?

I'm just a little unsure about (a) the work reduction dates, (b) whether Step 2 should be blank* and (c) the timing for visiting the SS office.

* Step 2 is titled: "Reductions in Income that have Already Occurred".

Thanks.

[glitchy]

I suspect you are injecting far more rigour into your thinking here than they have at the SSA!

I'm not the original respondent, but having been through a huge pile of "what if..." planning with regard to IRMAA this year, here's my take on a couple of these:

If I understand the above posts correctly, I should:

1. Wrap up both businesses at the end of 2024 (12/31 or as close as possible).

I don't see where timing matters here. If you wrap them up earlier in 2024 (which I suppose we're almost out of) you could ask for an IRMAA adjustment for 2024 as well if that is useful. If you are thinking about a 2024 IRMAA adjustment, the two key questions are 1) Did you have a qualifying event in 2024 or before that affects your 2024 income? (If yes, you *can* file) and 2) is the 2024 income actually less than 2022 such that this is actually useful? (If yes you *want* to file.)

2. Wait for my 2024 1040 to be filed.

Not necessary. They are used to dealing with assertions. If you go in person they may have you sign a statement saying that you closed your business but paperwork to that effect is fine. Posters in other threads have done this over the phone! Remember that they are in this for the long haul, as probably are you, and if your ultimately filed taxes disagree with your SSA-44 they will, eventually, very very eventually, catch up with you and get their pound of flesh. My IRMAA reconsideration was granted based on a crappy printout of a company-provided termination letter and my best guess at what my resulting 2024 income would be. Our IRMAA letter for 2025 just showed up and I'm going to go drop off a packet at the local SSA office RSN to get that reconsidered and I fully expect to be successful.

I have another thread here somewhere where I was considering something more elaborate, which was to keep my 2024 IRMAA payments as-is (thus based on 2022 income) and completely blow out my 2024 income with Roth conversions and RMDs and all that kind of carrying on, and then file for reduced 2025 and 2026 IRMAA based on my new retirement income and 2024 qualifying event. I didn't end up going that way but near as I can tell it would have worked fine and would essentially keep 2024's outsized income from ever being used in an IRMAA calculation.

If you want a reality check on this stuff I do agree with your plan to to talk to them in person. At least around here they're friendly and helpful.

[cowdogman]

I suspect you are injecting far more rigour into your thinking here than they have at the SSA!

I'm not the original respondent, but having been through a huge pile of "what if..." planning with regard to IRMAA this year, here's my take on a couple of these:

If I understand the above posts correctly, I should:

1. Wrap up both businesses at the end of 2024 (12/31 or as close as possible).

I don't see where timing matters here. If you wrap them up earlier in 2024 (which I suppose we're almost out of) you could ask for an IRMAA adjustment for 2024 as well if that is useful. If you are thinking about a 2024 IRMAA adjustment, the two key questions are 1) Did you have a qualifying event in 2024 or before that affects your 2024 income? (If yes, you *can* file) and 2) is the 2024 income actually less than 2022 such that this is actually useful? (If yes you *want* to file.)

2. Wait for my 2024 1040 to be filed.

Not necessary. They are used to dealing with assertions. If you go in person they may have you sign a statement saying that you closed your business but paperwork to that effect is fine. Posters in other threads have done this over the phone! Remember that they are in this for the long haul, as probably are you, and if your ultimately filed taxes disagree with your SSA-44 they will, eventually, very very eventually, catch up with you and get their pound of flesh. My IRMAA reconsideration was granted based on a crappy printout of a company-provided termination letter and my best guess at what my resulting 2024 income would be. Our IRMAA letter for 2025 just showed up and I'm going to go drop off a packet at the local SSA office RSN to get that reconsidered and I fully expect to be successful.

I have another thread here somewhere where I was considering something more elaborate, which was to keep my 2024 IRMAA payments as-is (thus based on 2022 income) and completely blow out my 2024 income with Roth conversions and RMDs and all that kind of carrying on, and then file for reduced 2025 and 2026 IRMAA based on my new retirement income and 2024 qualifying event. I didn't end up going that way but near as I can tell it would have worked fine and would essentially keep 2024's outsized income from ever being used in an IRMAA calculation.

If you want a reality check on this stuff I do agree with your plan to to talk to them in person. At least around here they're friendly and helpful.

Thanks. My goal is to reduce 2026 IRMAA by using 2025 MAGI instead of 2024 MAGI. I'm 65. My wife is 62 and so she won't be affected.