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January 15, 2022 8:30 am
This week Hans and Robby discuss IRMAA aka Income-Related Monthly Adjustment Amount. In layman's terms, it's Medicare tax for high income people.
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Hello this is Matt slick from the match look like podcast right defend the Christian faith and lay out our foundation of the truth of God's word for chosen Truth Network podcasts starting in just a few seconds. Enjoy it, share it, but most of all, thank you for listening and for choosing The Truth Podcast Network. This is the Truth Network welcome to finishing well brought to you by Cardinal guy, certified financial planner on the child. Best-selling author and financial planner helping families finish well for over 40 years of finishing well will examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Medicare IRA long-term care life insurance and investments and taxes. Now let's get started. Finishing well, finishing well is a general discussion and education issues facing retirees guide.com are no advisors on trial CFP some insurance this show does not offer investment products or investment advice are welcome to finishing well, a certified financial planner Honda Shiloh in today's show is Irma for 2022.
You know, I guess times before we even get into the biblical reference of it when we need to give some people a little bit of understanding of who is Irma or what is Irma will invite Irma is married Irma stand for is income related monthly adjustment, I'm sure that clears up a lot.
Let's just say the Medicare tax for high income people are higher income people. So if you may some pretty significant money you have to pay a lot extra for your Medicare to the government to receive hand Irma part of his job but instead she has married Uncle Sam. However, there are some definite differences between aunt Irma and Uncle Sam. And at that kind leads to a biblical precedent would not talk about today and that one of the ways that they calculate the Irma are this tax for your Medicare. Have they use what they call the cliff approach, which is kind of an interesting thing is like if your income is $91,000 or less. You don't have to worry about anime and all, but if you make 91,001 penny you went over the cliff and you now are going to have to deal Irma said to some extent as it goes on will go into a lot of that in the show, but interestingly as I was reading that and thinking about it. It is in God's economy, but he likes the cliff approach as well, like if you have one sin. If there's just one thing you're not perfect and off the cliff. You go and I love I love love love the very first verse of the hundred 19 Psalm and have retreated in Hebrew.
One lady could translate that would be blessed are the perfect who are in the way that walk in the law, the Lord will have an anomaly. Perfect people he ever met that if you are perfect you don't qualify under the blessed category as far as the hundred 19 Psalm verse one, but God knew, as did the psalmist that Jesus would die to take us over the cliff. There is one perfect person. It is Jesus. And so the good news is that if we can get up underneath this perfect, the perfection, then we can begin to see like even in Romans 12 to where it where it talks about that. We can begin to prove his perfect will write in an animal in doing that we have to have a renewing of our mind that comes with being within Christ, and so were hoping in today show and renew your mind a little bit when it comes to Irma Riddle on anybody cinnamon get aggravated over doing can't go to get aggravated.
Very good. And people man I let him have that this is really a tax planning issue in an income planning issue and then the first thing we gotta do in order. Doing this people is, we gotta figure out you what we have control over what we don't have control over and Dan get them one dollar under the threshold or the cliff that's possible. So and the thing that is also upsetting about his nobody talks about me. I got several of my YouTube John and what were talking about today as it got new rates for 2022 and so and the people that this applies to their getting letters this month but I got them last month that okay because you made such amount that such amount back in 2020 on your tax return, you are now going to have to pay this amount for Medicare part B and this amount for Medicare part B, which is more need not what it is surcharge tax based upon your income. Two years ago now, which is as clear as mud now and it's a point for concern as you do anything financial planning rise right with money that might affect somebody's income in 2022. When it comes to some the things that we discussed in the past, Roth IRA conversions and those kind of things. What we do in 2022 is going to affect our Irma cliff in the year 2024 right it is so you know starting point for a single day. Anything in Irma's $91,000 in 2022 2022 year on Medicare. Your income tax return was more than 91,090 1000 or more.
Your urine at a summer now for a married couple filing jointly. That number is double that of hundred and $82,000.
Well, I can feel people turning the channel now they're saying let's not me.
You know we we don't make we don't make that much. So I guess we don't have to worry about this. Well, partly true, but don't change the channel yet because what we do for a lot of people in their 60s come into even before Medicare we start doing raw IRA planning and Roth conversion planning which is really tax planning. So we start taking some of their pretax IRA money and we start moving it over and smaller amount year-by-year to create a tax-free account and another show, another day we were doing that we always have an ion Irma because when they get on Medicare. All of a sudden all the wonderful tax planning. We did three years ago come back and bite them because now the opinion Irma surcharge for the Medicare so that you know that we want our clients to be aware that you and we look at people like cash in their retirement account with some people that when it comes time for retirement. They just take a retirement account. They just fail and pay the taxes you can. Or maybe they're getting bought pension plan where instead of taking the monthly pension for the rest of their life. They gone to their employer and their places know what will live by that will buy you out and then they take the check for hundred $50,000 or 250,000 or 80,000 or something and then they they know they gotta pay taxes on it, but it also piled on top of their other income. So there's all kinds of people we would categorize as rich and up with an Irma problem so we all need to learn about once because I guess I can talk about it for a couple years now, as I clearly had no idea what Irma was sick but after a while of the fog, Claire's Annika okay II think I understand and and I also understand that clearly it's part of the way the government is ensuring that that we are going to have Medicare for for people that really needed on into the future right that the deeper issue you think about it I'm paying right now at 63 years old for me.
About 1200 bucks a month for my health insurance through my business and my wife can about the same and when I go on Medicare year and 1/2 from now that 1200 bucks a month is going to be gone and I'm now going to have Medicare my income combined income is less than 182. I make sure that sheltered some of my money within the business. Think a sum lower than that. So I won't be facing Irma and so I'm willing to pay for my part B, $170.10 a mother, whatever it is two years from now year from now, getting closer than I think, and pay any extra for my part D, but if I was mean and if I did it is really not all that bad. It's an extra 50 or hundred dollars, but it could be for people that show income. Three.
$400,000 of your talk about another 500 bucks a month, still less than what I'm paying for my insurance guy just spoke to this morning who is becoming a client need bind Medicare insurance from us.
We got on the topic. Irma and his income is pretty substantial and he's going to be paying for each of husband and wife another hundred bucks a month so that that's noteworthy but he's paying about like I'm paying for his health insurance right now so this is just so instead of paying health insurance companies paying the government to have Medicare and it's just like you said this is this is making people that have the money to do it patient master for their Medicare and shore up the system so as we talk about when I frustrated or angry. Just think through the planning process and see what it is. And of course where we got a whole lot more for come up along those lines, but we want to remind everyone that the show was brought to you by Cardinal guidance cargo guide.com or you can email Hans he can get his book the complete cargo guide the planning for and living in retirement, which you know in the Medicare section there. I can tell you there's all about our men. There as well as his YouTube channel which is Cardinal advisors since you got a Cardinal advisors on YouTube. There will be an upcoming video on Irma for 2022 and so that when we come back. We've we've got a whole lot more to help clarify this in and hopefully make it easy for you to say okay I understand this. It's a part of the planning again.
Isn't anything that we would recommend you try at home, but it's just good to have basis of of understanding and cons and will be right back with a lot more of her Irma for 20 Hans and I would love to take our show on the road to your church, Sunday school, Christian or civic room. There's a chance for you to advance the kingdom through financial resources and leveraging Hans expertise and qualified charitable contributions veterans aid and attendance, IRA, Social Security, Medicare, and long-term care. Just go to cargo guide.com and contact Tom to schedule a live recording of finishing well, your church, Sunday school, Tristan or civic contacts on Cardinal guy.that's Cardinal guide.com welcome back to finishing well with certified financial planner Hans Schild and today's show is Irma four 2022 and you know Hans wait that is really handy chart that will be available course in the in the YouTube video on Cardinal advisors that when the panic go through that to bring some clarity guy.com agent all the way down to the bottom resort missing you and love you and I are looking at right now is there. It comes from it fly like all priorities, and other things just to give you an example so married couple fog.
Use us as an example of assume that I'm on Medicare now and because I have an adjusted modified adjusted gross income of less than 182,000 Irma doesn't apply, but let's just say that I did like the guy. We were just talking to you between 284,000 340,000 of income and so instead of paying hundred and $70.10 a month for his part B is a 442 30 or an extra 272 bucks a month times two, because they're married couple was turning 65 so that financial money, but it income is also associate financial money and basically can afford now think I was asking him is he retiring his income going to be going down to St. Louis and he said well eventually but he's doing a lot of things and so not in the near horizon because of he was retiring soon we would do an Irma appeal for them to get the letter says that they got your firm and terminates finding and send you a letter and send you a bill and then we would file an appeal and in the appeal were just gonna say well yeah sure he made this much couple years ago but he's gonna make up. He made a pretty good income last year but it income this year is the much smaller because he's retired as a life of that soak ways to get out of this is if you're going to have a significant income reduction and also something that the chart is for 42 Medicare part B and then also getting $51.70 for his part D, which is his drug plan right yet to be on top of the drug plan.
The other drug plan premiums are going to be $10, $20, $30, about seven dollars, then this dude and his wife there to get an extra 5170 on top of people give aloha about this to condescend to get angry and so my job is not to really express an opinion about this is what's coming out of the government is nothing we can do about it and you try to look for some good in it and I do as well that this is financial shoring up the Medicare program for this money goes right back into the Medicare program, but for him.
That doesn't do anything to make somebody less man and the thing I want to make complaining is is that if he goes one dollar into the $284,000 bracket that's what you're talking about the beginning, as the clip approach makes $284,001 B is going to pay that extra 442 272 20+ the 5178 campaign that twice on is why another way to look at it as if he was at 270 283,000 you would be in the lower bracket and then his surcharge would be an additional hundred and 70 candidate is 32 to so that one dollar cost hundreds it it absolutely is a war doing tax planning income planning around IRA conversions to raw work plan in the future were looking at the threshold just as well as were looking at the tax bracket so but we don't let the Irma tail wave the text for your may qualify them a little balalaika buddy. When you use permit to do all your tax playing with some of the people get so upset about it that they want to bring that thing down to zero duality tax planning. Then they make foolish mistakes and pay a lot of taxes they don't really need to pay so what I mean by that is Irma for one year. So me this 2022 is based upon your 2020 income which you can't do anything about right now. Anyhow, I will file an appeal. And so what you can do something about it, 20, 22, income or we can make withdrawals from an IRA conversions all elect, stop, but we don't get too taken up with them because or permit itself because for one year and it's really cool person in this income level is not a huge amount not so. We will learn about it. We want to do our best to minimize we don't want somebody paying that just retired their income is going way down and it is a lot. So we use in all these things we got several competing objectives but when were doing income planning for people or write a financial plan when they get to be 65 in our chart a few years now for one of their the other ones getting there were to use these thresholds and just decide how much Irma. We can stand or not. Project thing in the future and I love a lot of the stuff that's on this chart that that you got from its lot better things that you have your younger things like health savings accounts into CDs is all sorts of helpful stuff right well yeah native people are part of a health savings account you built up some money in their wonderful letting me know you got it there, you can't continue to participate in an HSA.
Once you get on Medicare. That's a no-no when she sign up for Medicare. No more HSA contributions would keep people to God, and you can spend with God. You can use the money in your HSA to pay your Irma and part B and part D chart along with paying for your Medicare supplement along with paying for your cost out, you start throwing it all in their account them pretty quick once you got a chance about why not, why not get those tax dollars out of the HSA get reimbursed for things without paying taxes at home mom all printing another thing on here is the QCD strategy. So if you're over 70 and you been paying Irma, you continue to pay her and some of that or a lot of it might be driven by your minimum distributions where you're having to take money out of your IRA or 401(k) because your 72 and older and you could use acute CD or another words, get your minimum distribution where part of it to charity like the church or missions or whatever charity you decide to lower his taxable income to point out that the QCD stands for qualified terminal distribution so fearless in this for the first time. I know I probably lost a lot. But you know it's nice to know that wow through the QCD through the qualified charitable deduction because you're using that for your distribution but because New Year's and that money where you would normally be giving them money than that means you don't have to take the income in order to use it right. I said that probably my client January every year they give $100,000 to settle. Most of them including the church mission and then some other Terrace local charities.
You can do as many as you want and they give it directly out of their IRA through this qualified charitable does not show up on the tractor, thereby lowering their taxable income and be a reduced term and the time to do those.
CDs by where qualified charitable over talking about those January because they're not count toward your required minimum commission they need to be the first distribution of the year for the first several distributions if you can do several PCVs of the time to do those January. I'll be glad to help anybody, especially if the monies going to the church. That's a great great strategy and it's a win-win for everybody thought it and I think that more churches out of get acted with the their stewardship ministry where they with their older content on the older folks, a lot of them are to sit in on IRA money just taken the minimum distribution paying taxes on it and then there ultimately leave that money to the next generation and they could be preserving their other money. Besides the IRA doing other donations to the key CDs and then went charities when the people went on the tax return and then the beneficiaries win because they get unencumbered money or they get money that they don't have to pay tax on will also into this is a I'll be glad to give that talk to any church that wants me to come out and ultimately the government Wednesday nights so yeah this is it still resources that are used to help that that skin decrease the need for no other charitable programs at their back while people to know about and there there are good Irma reduction strategy getting income later in retirement through a raw withdrawal is another way to reduce government charges because they don't count as income that part of my plan is to when I retire to start distributing money to myself, my raw developmental security and Dan. I don't intend to face in knowing my retirement in the 70s right center go back to regular IRAs and then we have these that you're paying the taxes before they go into the Roth's son to take the distributions afterwards.
Which by the way there's no minimum distribution on the IRA. If it's a Roth IRA right right and so when you taken distributions out of a Roth IRA does not affect your income at all and so there is no possibility for Irma up charges for Matt and so again it's really cool stuff we do recommend the course to call Cardinal Dodd call Hans he would love to help you with this kind of stuff just got a Cardinal guy.com and there you can find all the contact information actual chart that we been reading for today is as Hans pointed out is on the Medicare page and you can scroll down to the bottom it and you can see all that that we describe today the course, there will be an upcoming video that will be put out, Cardinal advisors on the YouTube page there for Cardinal Guyton and was always fun so it's great to be with you wonderful. Thank you.
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