I want to convert some of my Traditional IRA to ROTH IRA because I suddenly lost my spouse a year ago and have very little income this year. But, the people in the office at Arkansas DHS couldn't tell me if it would affect me staying on Medicaid. I explained that it would not be a withdrawal, just a conversion, and that I would owe taxes on it. I had only about $10,348 gross in pension income, and will have about $5,088 estimated interest income. So, I'm trying to figure out how much I can convert to stay in the 12% tax bracket, and whether I will get kicked off Medicaid if I do it.
Plus, I have to convert shares, not dollar amounts, so I'm not quite sure how to do that, but have a call into the company holding the IRA.
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The conversion amount is added to your other income. You would have to ask your Medicaid provider what your income cut off is. Maybe better to convert some this year and the rest next January.
Arkansas has an income limit of somewhere around $1,615.95/month for the exchange product I'm on, though I saw my adult child's Medicaid told them it was around $1,750. So, any extra income I make can kick me off. The people dealing with it in the office say if it is not on some list they have that is a short list, then they don't know what it is and count it as income if it is taxed. But, another worker told me I don't need to report it, and that if it is reportable, the IRS will notify them. They told me that if I get kicked off, it is only for that month, and I can reapply. Yet, another worker said it will have to be evaluated. And others are telling my child they have to wait a year to reapply! But I've been told that is not true. Ugh! It just doesn't seem right that an IRA conversion in which I don't receive any funds, but actually owe taxes, should count as income to me. But, I guess I'll do the conversion and let the chips fall where they may. I may have to reapply.
I'm also confused because I have to choose to either convert shares, and not know how much the conversion amount will be exactly, or sell stock, let it settle over 2 days, then re-buy the same stock, and not know how that will affect my shares. I'm tending to go with shares conversion so I don't hop in and out of the market, and hope I don't go over the 12% tax bracket. Any advice?
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