Formula for MAGI
Is there a simple formula to figure MAGI. Website, calculator, What is included and discluded. My understanding from one of Ed’s books is that RMD’s are not included in this formula. Thank you!
Is there a simple formula to figure MAGI. Website, calculator, What is included and discluded. My understanding from one of Ed’s books is that RMD’s are not included in this formula. Thank you!
Permalink Submitted by Bruce Steiner on Sun, 2009-02-15 16:11
The starting point is Section 408A(c)(3)(C)(i), which says that adjusted gross income is determined in the same way as under Section 219(g)(3), except that the income from the conversion does not count, and required distributions (at least from IRAs) also does not count.
Note that there are no required distributions from IRAs or defined contribution plans for 2009 (though someone who reached age 70 1/2 in 2008 and deferred his/her 2008 required distribution until 2009 must still take his/her deferred 2008 distribution by 4/1/09; and the $100,000 income cap goes away in 2010.
Turning to Section 219(g)(3), we see that adjusted gross income for this purpose is determined after the application of Sections 86 and 469, but without regard to Sections 135, 137, 199, 221, 222 and 911, and the deduction allowable under Section 219. While these Sections may not apply very often, the fact that they might apply to some IRA owners makes it dangerous to provide a simple answer.
Fortunately, the $100,000 income cap goes away in 2010.
Permalink Submitted by Joel Dawson on Sun, 2009-02-15 16:25
IRS Pub 590 p.17 has a MAGI worksheet and instructions.
Permalink Submitted by Alan Spross on Sun, 2009-02-15 17:30
Note that the RMD exclusion only applies to IRA RMDs and also only for Roth conversions. RMDs are not excluded for purposes of regular Roth IRA contributions.
For example, if you have earned income from work after age 70.5, a large RMD from either a QRP or a TIRA could boost MAGI beyond the eligibility limit for a regular Roth contribution.
In 2009, the amount that would have been an RMD, but due to the waiver is not an RMD, cannot be excluded. Some automatic distributions set up for IRA RMDs have not been stopped for various reasons.