@Nan2C wrote:
To add another layer: As newly retired and paying attention to all the brackets that can affect taxation, including the Income Related Adjustment for Medicare payments, I am wondering if a non qualified withdrawal (within the 5 year time from a particular roth conversion (basis) is added to the MAGI from which the IRMAA is derived?
Age: over 65.
in January 2022 cashed out a roth part converted in 2017 (6500.00) and part (another 6500) was converted in 2019. (all was originally a non deductible IRA)
income was under $120.00.
All your withdrawals are tax free over age 59-1/2. That's the simple answer.
The medium-complex answer is that:
1. Withdrawal of contributions are never taxed.
2. Withdrawal of a non-qualified conversion (less than 5 years per conversion) is not subject to income tax, but is subject to a 10% early withdrawal penalty.
2a. But the 10% early withdrawal penalty never applies if you are over age 59-1/2. So anyone over age 59-1/2 can ignore the separate 5 year clock for each conversion.
3. Withdrawal of earnings is subject to income tax if the account is open less than 5 years or you are under age 59-1/2.
3a. In your case, the account is opened more than 5 years and you are over 60, so earning are never taxed.
So for your specific situation, all your Roth withdrawals are never taxed.
A withdrawal from a Roth IRA is never a MAGI adjustment for IRMAA.
However, because a conversion from a regular IRA to a Roth IRA creates taxable income, the conversion IS income included in MAGI for IRMAA in the year you do the conversion.
So short answer, it is IRMAA income when you do the traditional to Roth conversion, but it is not IRMAA income when you withdraw from the Roth, regardless of the 5 year rule for conversions.
