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Level 1

Does a 401(k) to IRA rollover count as gross income against my Obamacare income, and force me to repay all $13,000 of the government aid I got for my healthcare premiums?

Recently retired. Rolled over two 401(k)s to my IRA. I did received 1099-R's. Turbotax says this puts me grossly over my allowed maximum income even though I didn't see a cent.

4 Replies
Level 6

Does a 401(k) to IRA rollover count as gross income against my Obamacare income, and force me to repay all $13,000 of the government aid I got for my healthcare premiums?

It depends. If your 401(k) was funded with pre-tax dollars, and you rolled the 401(k) into a Roth IRA (or if the roll over was considered taxable as any other reason). You need to see what code was on the 1099-R, if it has code 1 on it, then yes it is considered a taxable event. 

Under Obama Care the income calculation for Premium Tax credit includes the following:

·         Earned Income

·         Wages, salaries, tips

·         Self-employment, business and farm income after deduction of business expenses (including depreciation and capital losses)

·         Unearned Income

·         Interest (taxable and non taxable)

·         Social Security (SSA) income

·         Dividends

·         Taxable state income tax refunds and credits

·         Portion of scholarships, awards or fellowship grants used for living expenses

·         Alimony received

·         Capital/other gains

·         IRA distributions (taxable amount only)

·         Pensions and annuities

·         Rental real estate income and royalties

·         Unemployment Compensation

·         Other income if taxable (such as prizes, jury duty pay not given to employer, etc.)

If your IRA distributions are non-taxable then they would not count towards the income. 

If this isn't the case, then it could be that the 1099 code is wrong and needs to be corrected. You can get in touch with your old 401(k) companies and work with them on getting it corrected, OR the information that was entered into Turbo Tax could be incorrect. Go to the 1099-R section of the program and make sure the correct codes are entered. 

Level 1

Does a 401(k) to IRA rollover count as gross income against my Obamacare income, and force me to repay all $13,000 of the government aid I got for my healthcare premiums?

I have the same issue as above.  My 1099-R is filled out correctly however Turbo Tax software is counting it as income for Marketplace Health Insurance.  This is a software issue within Turbo Tax.  I did my taxes in 2 other online tax programs - H&R Block and TaxSlayer - both of these programs do not report the traditional IRA direct rollover as income for purposes of MAGI.  If Turbo Tax cannot correct this, I will have to use another tax program - I have been with Turbo Tax for years!!
Level 1

Does a 401(k) to IRA rollover count as gross income against my Obamacare income, and force me to repay all $13,000 of the government aid I got for my healthcare premiums?

This appears to be an older question, but I am having the same issue with 2018 TurboTax and have not got a satisfactory answer. Evidently the problem has not been fixed. Would like to know how to fix this problem!
Level 4

Does a 401(k) to IRA rollover count as gross income against my Obamacare income, and force me to repay all $13,000 of the government aid I got for my healthcare premiums?

Yes, I had the same issue for 2018.  To fix - Change the rollover 1099-R box 1 to $0 and save.  Then delete the 1095A and 8962 forms.  Then run through the Health Insurance section questions again.  Last, verify correction in form 8962.