Simple IRA to a Roth IRA
Opened Simple IRA in June 2014. Is it possible to transfer this account to my Roth IRA with another financial institution?
I just converted a Traditional IRA to a Roth IRA in 2017 for a large amount of money. I understood I had to pay taxes on the converted amount. Now, however, I was told that I can exclude the converted amount from the MAGI Social Security will compute for me for the 2019 cost of my Medicare Insurance. Is this true? I won’t have to pay a higher MAGI due to the Roth conversion amount that increased my AGI for 2017? Thanks. Linda
Sorry, but not true. Conversion income is included in your MAGI for purposes of IRMAA premium calculation. However, there is still time to recharacterize part of your conversion to lower your MAGI surcharge tier or eliminate the surcharge entirely. However, if you have significant gains on your conversion remember that these potentially tax free Roth gains will be transferred back to your TIRA. Therefore, determine how much your MAGI exceeded the threshold, then determine if it is worth it to do a full or partial recharacterization. Remember, you only need to be 1 dollar below the threshold to lower IRMAA.
Permalink Submitted by Alan - IRA critic on Mon, 2018-03-05 15:24
Yes, you can convert to a Roth directly from a SIMPLE IRA once the 2 year waiting period has been completed. However, if the SIMPLE balance is large, you might not want to convert all of it in a single year since that could increase your marginal tax rate.