Ihould the cost basis have been counted as income (2017) when converting a 401(k) plan to a NUA (Newt unrealized Asset) plan.

[Rich84]

In 2017 we (retired and over 59.5) converted a 401(k) plan to a NUA (Net Unrealized Asset) account. Part of that process is to pay tax on the cost basis ($147,000) of the company stock moved to the NUA. The cost basis amount was added to line 16a of form 1040. This then triggered social security to increase the amount of IRMAA (Income-related Monthly Adjustment Amount) by over $500. Should the cost basis been counted as income because we didn't receive any money?

[Critter · Accepted solution]

Yes ... you had to pay the taxes now for the switch to happen ... now when you sell the stock later what you paid will be part of the cost basis so you are not taxed a second time. 

[Critter]

The fact that you got hit with the medicare adjustment was the effect of poor tax planning and there is nothing you can to about it now except be happy the increase only happens for one tax year.

[Rich84]

Thanks.....for nothing!

[Critter]

Don't shoot the messenger ... shoot the person that gave you the bad advice or didn't tell you the tax consequences to those actions ... my client's would have know their options and the tax issues so they could make an informed decision.... but when you are your own tax preparer then you had no one to warn you ... sadly the DIY TT program cannot advise you on such things.