Roth Conversions Or ACA Subsidies-What is Better for Early Retirement?

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This video is a detailed discussion of Ari Taublieb with Cole, co-founder at Move Health, on the advanced strategies involved in tax planning for early retirees.
The discussion aims to provide viewers with insights into the complexities of early retirement planning in the context of healthcare costs and tax benefits, particularly comparing Roth IRA conversions with ACA (Affordable Care Act) subsidy planning.
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Time Stamp
00:00 Intro
00:20 Introduction of Guest
00:48 Get Free E-Book
02:37 Starting With Main Discussion-What Is Roth Conversion?
04:55 What Is ACA-Affordable Care Act?
06:45 Comparison of Subsidies and Conversion Strategies
09:13 Pro-Tips
11:35 Discussing Some of the Common Mistakes
13:33 What Is IRMAA?
16:28 About Move Health Care
17:50 Summary
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Ari Taublieb, CFP®, MBA, is the Vice President of Root Financial Partners (Fiduciary) and host of the Early Retirement Podcast.
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⚠️ "DISCLAIMER:⚠️
All content is not to be received as financial advice, and each individual should consult with their dedicated financial planner, tax preparer, estate attorney, etc., before making any financial decisions.
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[@davidfolts5893]

Thanks for the great video, Ari. You and James are the dynamic duo of KZbin financial content creators!

[@earlyretirementari]

Our pleasure!

[@patrickoconnor2547]

Waiting for information like this. Age 59, on aca. Luckily, we have a nice amount in a brokerage account. Withdrawing 3k a month and 2k a month from traditional IRA to live on. We contribute to HSA max and get 10k a year deduction for contributions. We pay zero dollars for health insurance. We show income at around 35k with 60k withdrawals.

[@paulscheuer9455]

Ari, good content BUT, I was looking forward to a couple case studies to DETAIL the financial math ROI on ACA subsidy vs. say RMD minimization but skipping the ACA subsidy - ie. Financial cost benefit analysis of creating lower income for a subsidy vs. Minimizimg RMD income and skippimg the subsidy.

[@earlyretirementari]

We have more content coming on this! Thank you so much for your patience :)

[@Move_Health]

Hey Paul! We'd love to connect and run scenarios specific to your needs. This comparison is a highly customized process!

[@paulscheuer9455]

Great!

[@paulscheuer9455]

​@@Move_HealthI have sent my details to you

[@paulscheuer9455]

​@@earlyretirementarifor the next video, please go into the details with multiple examples of cost benefit analysis of "saving now" (ACA subsidies) vs. no subsidies due to ROTH conversions instead to lower large RMDs (saving later)

[@markb8515]

Thanks Ari for the video, it was very helpful!

[@earlyretirementari]

I'm so glad!

[@randolphh8005]

We had this issue, I still have a small amount of PT income of about $20k. So we contributed to Roth and HSA and still qualified for $14k in credits

[@Davek111]

Well done!!! You should have no problem keeping yourself at the absolute 150% FPL and get the most from the premium subsidy.

[@randolphh8005]

@@Davek111 yes, and many don’t realize that in many counties HSA eligible plans are on the marketplace, so if you have the cash and a little income you can contribute close to $25k to Roths and HSA as a couple while still getting substantial credits to help make it all work. This year is the end of credits and HSA for me since I turn 65 next month, but I can still fund our Roth IRA’s with the small amount of earned income. Obviously funding a regular IRA would be stupid at our current tax rate of 10%-12%.

[@dancurran8977]

Last year I still had a couple months of W2 income so I held off on Roth conversions to save with ACA. I am starting Roth conversions this year but I will hold back a bit to get a decent ACA subsidy. Thanks for the video.

[@Davek111]

Excellent move!!! The money you save today on those premiums is worth far more than the same $ amounts when you hit 70.

[@earlyretirementari]

Good stuff and Glad you enjoy it!

[@paulscheuer9455]

If one has a High Deductible ACA plan, can qualified $s (IRA / 401K / 403b) be moved to an HSA (ideally the annual max.) without the the move creating a taxible event that would count against your annual subsidy?

[@steveb855]

Is there an ACA PTC formula that can be spreadsheeted to calc PTC vs Roth conversion taxes?

[@randolphh8005]

Don’t know about a formula, but there is a chart published by the IRS that tells you the percent subsidy based on income. Just look up the IRS instructions for filling out the PTC form. It depends on family size and percent of poverty level, but it looks like it is a progressive chart, so a simple formula won’t work.

[@matthewmccarthy1738]

Great episode, but I was hoping you'd cover if it's OK/advisable to withdraw from Roth IRA for living expenses to help keep MAGA low enough to qualify for ACA subsidies. Thanks

[@earlyretirementari]

It’s okay, but not optimal in most cases. Let the Roth IRA grow tax-free!

[@heidikamrath1951]

Did you mean MAGI?

[@Sinisterdaze]

I currently put in money to my 401k traditional. I’m wondering if there is a certain point that makes sense to do Roth 401k (which my employer offers and still matches) instead to avoid conversions later. I’m married and if we keep going by the time we retire we would have a couple million in each of our traditional 401k.

[@randolphh8005]

If you can get a Roth match, you want to be doing at least some Roth contributions. How much is harder to say.

[@dathat555]

I am maxing out my 401k pre tax (with employer match) AND 401k Roth. At my current tax rate it does not make sense for me to not take the 401k tax deferral. I will try to reduce that balance with Roth conversions after I retire at a (hopefully) lower rate. Figuring out how much to convert versus taking an ACA subsidy is my next challenge.

[@Davek111]

You guys failed!!! It would have taken 5 mins to put together 2 whiteboard examples.... One showing a low incomer driver vs a high income person. I'm 60 and managing a $2M+ portfolio, and I have my income from interest and capital gains far under the 150% FPL. I'm receiving nearly $24k in free premiums and qualify for the highest Silver plan on the ACA. So I have no deductibles with just $5 and $10 copays for any services. $24,000!!!

[@paulscheuer9455]

Wow! Congrats! Applogies im advance if this is too personal, but approximately how much monthly income dobyou ceate from that $2M+ portfolio? Do you find that you have to supplement your income from savings and dividends with ROTH $s to stay near 150% of FPL?

[@dathat555]

Congrats on the $2M portfolio. Are Roth conversions part of your picture? Agree on the need for some whiteboard examples.