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Returning Member
posted May 31, 2019 5:02:10 PM

Does the amount you take out of your 401-K at work get added to the Modified Adjusted Gross Income?

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1 Best answer
Level 15
May 31, 2019 5:02:12 PM

Assuming that you did not make any after-tax contributions to your 401(k), your entire 401(k) distribution adds to your AGI and is treated as ordinary income unless it is rolled over to another retirement account.  This income is included in the MAGI used for determining eligibility for health insurance Premium Tax Credits (and any other any type of modified AGI, as far as I know).

9 Replies
Level 15
May 31, 2019 5:02:12 PM

Assuming that you did not make any after-tax contributions to your 401(k), your entire 401(k) distribution adds to your AGI and is treated as ordinary income unless it is rolled over to another retirement account.  This income is included in the MAGI used for determining eligibility for health insurance Premium Tax Credits (and any other any type of modified AGI, as far as I know).

Returning Member
May 31, 2019 5:02:12 PM

so adding my 24K that i withheld will make me over the ROTH 181,000 cap

Level 15
May 31, 2019 5:02:14 PM

The distribution from the 401(k) would only be excluded from the MAGI for determining your eligibility for a Roth IRA contribution if the 401(k) distribution was rolled over, either to a another pre-tax retirement account (which would keep it from being part of your AGI in the first place) or to a Roth IRA (in which case it's subtracted from your AGI in determining your MAGI for this purpose).

See line 2 of Worksheet 2-1 for IRS Pub 590-A:  <a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/p590a.pdf">https://www.irs.gov/pub/irs-pdf/p590a.pdf</a>

Level 15
May 31, 2019 5:02:15 PM

Have you considered doing a rollover/conversion to a Roth?

Level 15
May 31, 2019 5:02:16 PM

If the 401(k) distribution was an RMD, it cannot be rolled over or converted to a Roth IRA.

Returning Member
May 31, 2019 5:02:18 PM

4.
Enter any traditional IRA deduction from Form 1040, line 32; Form 1040A, line 17; or Form 1040NR, line 32...................................  does this include 401-K from your job?

Returning Member
May 31, 2019 5:02:21 PM

its not a distribution. its taken out of my paycheck

Level 15
May 31, 2019 5:02:22 PM

Elective deferrals *to* your traditional 401(k) from your paycheck are not included in your AGI and therefore do not appear in your MAGI.  They are excluded from the amount reported in box 1 of your W-2.  They are not reported anywhere on your tax return as a deduction.

Elective deferrals to a Designated Roth Account in your 401(k) (a Roth 401(k)) do appear in your AGI and MAGI since they are not excluded from the amount in box 1 of your W-2.

Returning Member
May 31, 2019 5:02:24 PM

thank you for this clarification