Hello, I retired at 55 and a few years ago started doing conversions from my traditional IRA to Roth. I stopped doing large ones since now the IRMAA impact can be significant for both my wife and I (she is Medicare next year).
Last year I harvested some gains to get me up to the target IRMAA bracket limit. I'm using the same 2023 software to predict 2024 (recognizing not exactly the same).
I have recently discovered that had I done conversions instead of harvesting gains - I would be taxed differently. It's bizarre - in 2021 and 2022, 100% of my IRA distributions (that were converted) were part of my AGI and taxed accordingly - just as expected. In the 2023 software, however when I started instead substituting conversions instead of gains - only a little over 50% of the conversion amount is taxable (it ranges from 50.6% at $20K converted to 55.2% taxed of a $200K conversion. Note - 100% of my IRA is tax-deferred and all questions asked by TurboTax in the step-by-step are normal. I'm modeling the 1099R just as mine looked in 2021 and 2022 (taxable amount not determined, code 7 distribution (normal) IRA/SEP/SIMPLE box checked. I am 65 years old.
Has anyone experienced this? Is this a bug in 2024 TurboTax? Was there a change in the tax code in 2023?
