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SS and Medicare Penalty Avoidance

Well, I hope the have a SS expert out here that can answer a questions. 

As it is now my income is to low to buy the home I want but I could pull enough from my IRA to cover the 20% down payment on a new home. Normally when you show a large income increase SS raises your Medicare Part B accordingly and in this case it would show a very large increase in my income and SS will think it's from working a job and not where it actually came from or what it was for. They also could stop my SS for what they see as making more than I am allowed to under SS. Got any inside information for me so we don’t get caught up in this mess. Is there a form to fill out ahead of time to give SS a heads up on what I am doing and why.

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Bronze Conversationalist

@e209780s As you know, your IRA Distribution will be subject to Federal Income Tax (FIT) and possibly State Income Tax (SIT), SIT varies depending on your State residency. If you are concerned about paying IRMAA , your planned IRA Distribution will place you in a marginal tax bracket of 24% or greater (depends on the amount of your distribution). For example, in 2021, the IRMAA  is assessed for Single taxpayers with taxable income greater than $88 K and for Married Filing Jointly (MFJ) taxpayers with taxable income greater than $176 K. I rounded the amounts. FYI, the 24% marginal tax bracket for 2021 Single/ MFJ is $86,376 to $164,925/ $172,751 to $329,850, respectively. So, your FIT on your IRA Distribution is going to be greater than your IRMAA. You may need to discuss your situation with a qualified tax person such as a CPA. Also, you may explore other ways to fund your home purchase such as a 401 K loan, an FHA mortgage, borrow against any cash value life insurance, etc. In other words, non-taxable transactions. Good Luck.  

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Social Butterfly

.

I’m not a “SS expert”. However, I’d like to offer up a link from AARP that I think is a little more straightforward and candid in regards to your question.

Will a higher income affect my monthly Medicare premiums

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Honored Social Butterfly

Suggest you contact a local expert on your problem to get the best advice as they should know all the in and outs of this type of problem in your area, and ways to get around some of them.  Contact your local AARP Office if you do not know anyone as they should be able to give you some names. No one in here can do that for you.

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Honored Social Butterfly

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