Distribution from a Modified Endowment Contract added to MAGI
Hello,
I have a client with MFJ income of about $220K.
They have a life insurance policy that is technically a MEC they want to surrender with $28K in gains above their basis.
If they surrender the policy and receive the $28K in gains will this push them into the MAGI zone where they can’t contribute to a Roth IRA?
OR is the gain coming out of a life insurance policy not used to calculate MAGI?
Always love the feedback, thank you!
Permalink Submitted by Alan - IRA critic on Fri, 2024-07-26 18:06
Yes, the surrender will add 28k to client’s MAGI for Roth contribution purposes as well as tax (and penalty if under 59.5).