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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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[yestohappiness]

True, they will have access to an ACA with a “reasonable” premium at no matter what income amount, but if for 2 people the government over something like 40k income then the deductible and out of pocket max will jump to insane amts like 16k-18k per year, besides the monthly premiums…
The 2nd solution of holding as much cash as possible and using a brokerage accounts for dividends is much better as they can get a much better aca plan, but then they can’t do lots of Roth conversions in each year…
Great vid and good luck with the surgery!😊

[J--vi]

Thanks for the video Ari, and good luck with your surgery next week!

[deanfaklaris]

Assume another scenario is to consider how NOT using a taxable IRA/401k from 60-65 would increase the holdings in such an account resulting in higher RMDs since that account wasn't spent down a bit? Although, if the taxable IRA just withdrew enough to cover property tax, ACA premium would be ok???

[ericgold]

Hmmm. All I get from this video is a reminder that the Right Capital software is not smart enough to calculate ACA costs because it does not distinguish or optimize between income and taxable income, and the user has to figure it out separately. One.scenario.at.a.time.

The silver lining is that MOV has a tool to calculate ACA given an AGI. I was looking at the marginal cost of a Roth conversion yesterday in the context of a reduced ACA PTC -- in other words, the effective tax rate through the ACA brackets of 133% FPL through 400% FPL. Because the contribution percentage applies to the entire AGI, the effective marginal rate is considerably higher than federal + 8.5%. A not bad rule of thumb is federal + 13%. This pretty much excludes any thought of a Roth conversion that puts the taxpayer anywhere below 400% of FPL. My intuition says to simply find the unsubsidized cost of insurance and add that to the federal marginal tax of the conversion. Then you can try out the top of federal or IRMAA brackets to decide whether a Roth conversion is attractive during the ACA years.

My short conclusion for our MFJ was NO for two ACA people, yes this year for one ACA person and 412k mAGI (380k taxable). Since we pay about $9k per person without PTC, the addition to the effective marginal conversion tax rate is 9/380 = 2.36%