Roth Conversion and IRMAA Penalty
Hello!
I have a client that will turn 63 in April 2023. We are looking to do a Roth conversion in February of 2023. We know due to the Roth conversion this will increase their income on their 2023 Tax Return. Due to the increase in income this year, 2023, this will affect their IRMAA penalty in 2025 due to the 2 year look back, correct? So when calculating our Roth conversion we must take that into account.
Permalink Submitted by Alan - IRA critic on Tue, 2023-01-10 15:55
Yes, that is correct, but the IRMAA tiers for 2025 will not be published until late 2024 and there is no way to predict the inflation adjustment to the tiers announced in late 2023 and late 2024. It would be conservatively safer to manage the conversion amount assuming that the 2023 tiers will not increase or will increase by a very small amount.
Permalink Submitted by Abigail McNaney on Tue, 2023-01-10 20:42
Got it. Thanks for your help!