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Returning Member
posted Apr 3, 2024 12:08:57 PM

Does a deductible IRA always reduce MAGI? I was hoping for a strategy to reduce MAGI due to IRMAA.

I am right above the MAGI threshold for being subject to additional Medicare.   

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3 Replies
Expert Alumni
Apr 3, 2024 12:16:29 PM

Please see @dmertz's answer below.

 

$JoH8

 

[Edited 04/03/24 | 1:47 PM PST]

Level 15
Apr 3, 2024 1:43:25 PM

The reply by @MinhT1 [now removed] is incorrect.  A deductible IRA contribution will always reduce MAGI for the purpose of Medicare IRMAA.  MAGI for Medicare IRMAA is AGI (Form 1040 line 11) plus tax exempt interest (line 2b).

 

(I think that MinhT1 thought that you were asking about the MAGI for the purpose of eligibility to deduct a traditional IRA contribution or eligibility to make a Roth IRA contribution, which is not what you were asking.)

Level 15
Apr 3, 2024 2:42:37 PM

Well, perhaps some of what was removed, it might have explained the "deductible" part.

 

i.e. There is a caution involved, in that you must have "earned" income from working a job (W-2 or self-employed net gain) in that same year, in order that it might be a deductible contribution to the IRA in the first place.  

 

Yeah, as long as it actually is deductible, it reduces MAGI.