LTC and IRA Distributions
Looking into maximizing Roth conversions, however, wanting to leave enough in an IRA for QCDs and RMDs for LTC medical expense deductions in the future. Any “gotchas” or tips? Thanks.
Looking into maximizing Roth conversions, however, wanting to leave enough in an IRA for QCDs and RMDs for LTC medical expense deductions in the future. Any “gotchas” or tips? Thanks.
Permalink Submitted by Alan - IRA critic on Tue, 2024-07-02 14:25
Yes, you may want to convert somewhat less if you don’t have LTC insurance than if you do because you can generally deduct unreimbursed LTC expenses that exceed 7.5% of AGI if your total itemized deductions exceed the standard deduction. To that extent the taxable income from a TIRA distribution would be offset. Conversely, if you have to withdraw from your Roth IRA to pay these costs, you will have wasted some of the taxes you paid to convert and the medical expense deduction would be applied to much lower taxable income and might even exceed the taxable income. That said, it is hard to quantify just how much less you might convert since the total LTC costs you will owe can vary. Converting less may not apply unless you or family member needs to go a nursing home for more than the couple of months that Medicare would cover it.