If I withdraw from my 401K or IRA will it impact my Medicare?

 

401k and IRA Impacts Medicare 

Withdrawals from a 401k and IRA can potentially impact your Medicare costs in a couple of ways:

1. Increased Income-Related Monthly Adjustment Amount (IRMAA):

• Medicare Part B and Part D premiums are based on your Modified Adjusted Gross Income (MAGI) from two years prior.
• Withdrawals from traditional IRAs and 401ks are considered taxable income and can increase your MAGI.
• If your MAGI climbs above a certain threshold due to these withdrawals, you might be subject to an IRMAA. This is a surcharge added to your monthly Part B and/or Part D premiums.

2. Higher Tax Burden:

• While not directly impacting Medicare costs, withdrawals from traditional IRAs and 401ks are taxed as income.
• This additional income tax burden could affect your overall financial situation and limit your ability to pay higher Medicare premiums.

Here's how to minimize the impact:

• Strategic Withdrawals: Consider withdrawing only what you need to avoid pushing yourself into a higher IRMAA bracket.
• Roth Conversions: If eligible, convert some of your traditional IRA or 401k to a Roth account. Roth withdrawals (contributions grow tax-free) won't affect your MAGI. However, there are tax implications for conversions, so consult a financial advisor.

Explore Other Options: Look into other ways to meet your financial needs, such as tapping into a taxable brokerage account or a home equity line of credit, before withdrawing from retirement savings

To learn more Click Here and a licensed agent will be in contact