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Old 19-12-2018, 20:26   #16
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Re: Early 401K withdraw for ACA

So I may as well get this locked

It isnít my fault the ACA was passed. It wasnít even by my party. Those of you crying at me get a grip. Iím just playing by the rules and laws. Just me, joe the plumber type of guy who paid my taxes all those past years. Not using any fancy tax lawyer or even finicial advisors. Sorry if it bothers you that I took the time to learn how the program works

You guys donít like system, thatís just tough. I donít like the system either, but I didnít come up with it. But if you you think that Iím just going to stick my head in the sand and go without the coverage just because of that, well that is foolish.
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Old 19-12-2018, 20:37   #17
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Re: Early 401K withdraw for ACA

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Originally Posted by KTP View Post
There is another way to do this.

You can roll your 401K over to a IRA (or maybe just roll part of it, not 100% sure).
Thatís a different thing than what this thread was about. You have to take the money out of a plan and turn it into a gross income as that is what the basis is for an ACA subsidy. If all you do is take money out of a 401k and put it into a rollover IRA I donít believe will be any gross income.

But this is a different related topic.
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Old 19-12-2018, 20:40   #18
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Re: Early 401K withdraw for ACA

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Old 19-12-2018, 20:41   #19
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Re: Early 401K withdraw for ACA

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Thatís a different thing than what this thread was about. You have to take the money out of a plan and turn it into a gross income as that is what the basis is for an ACA subsidy. If all you do is take money out of a 401k and put it into a rollover IRA I donít believe will be any gross income.

But this is a different related topic.
Nope you did not read what I wrote.

You put the money into a rollover IRA yes. This does not generate any gross income.

Then you immediately (like the same day if you want) convert a portion of that roller IRA into a Roth IRA (you just open up a new Roth account...any broker website can let you do it in a few clicks). This DOES generate gross income which can be used, has to be used, as ACA qualifying income.

I know a lot more about this subject than I do boating.
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Old 19-12-2018, 20:43   #20
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Re: Early 401K withdraw for ACA

Does it count if you take a loan from your 401k rather than an early withdrawal? Does that count as income? Assuming you don't actually need the $22-$25k, a loan could save you the E-W fee.
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Old 19-12-2018, 20:46   #21
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Re: Early 401K withdraw for ACA

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Does it count if you take a loan from your 401k rather than an early withdrawal? Does that count as income? Assuming you don't actually need the $22-$25k, a loan could save you the E-W fee.
No, that would not count.

The way I said do it, roll to a IRA then convert that IRA to a Roth is the only way to avoid the early withdrawal fee if you are not going to go the 72-T route and establish constant continuous withdrawals.

Essentially, paying the early withdrawal fee is throwing a couple of thousand bucks over the side of your boat. Which, I guess is actually typical for boating, so...
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Old 19-12-2018, 20:54   #22
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Re: Early 401K withdraw for ACA

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It's free to you but a 'thank you' is appropriate for those of us who are paying for your 'free' health insurance. That subsidy is paid for by the rest of us.
Do you also object to the health insurance tax subsidy that a business gets when it offers you health insurance. They are both effectively payments from Washington.
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Old 19-12-2018, 21:02   #23
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Re: Early 401K withdraw for ACA

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Do you also object to the health insurance tax subsidy that a business gets when it offers you health insurance. They are both effectively payments from Washington.
Shhh, you are not supposed to mention the huge subsidy that has been going out to employed people for decades, dwarfing anything the ACA has given out to date.

By not paying tax on the employer provided health insurance, the employee is getting a government subsidy. The health insurance is a form of compensation the same as salary. This is quite easy to see if you were to expand it to housing, food and car. If your employer paid your house payment, car payment and food, you would expect that to be taxed as compensation.
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Old 19-12-2018, 23:12   #24
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Re: Early 401K withdraw for ACA

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No, that would not count.

To avoid the early withdrawal fee if you are not going to go the 72-T route and establish constant continuous withdrawals.
KTP, thanks for the info. Question: if I have more than one 401k account, can I start constant continuous withdrawals from one without touching the others? Can I take, say, 20% of the account a year (starting at 55) so it is more or less depleted by the time I turn 60?
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Old 19-12-2018, 23:39   #25
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Re: Early 401K withdraw for ACA

If you work in another country and live there but are an American citizen isn't the fifty K tax free.
If you make money from the sale of a business and invest it into another business you own aren't any losses going to offset the gains.
If you own a boat and it is, in turn, owned by your company for charter aren't the improvement costs deductible.
We did not make the rules we only have to take advantage of them
B.tw...If we had a 3% national sales tax we would be in the black, all medical would be free, college education free, etc...And those of us avoiding taxes, Asians, Arabs, eastern block citizens would not have a way to get around taxes. Nothing against them, but hiding income is how they have have live for thousand of years. Can't avoid a national sales tax
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Old 20-12-2018, 01:23   #26
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Re: Early 401K withdraw for ACA

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Does it count if you take a loan from your 401k rather than an early withdrawal? Does that count as income? Assuming you don't actually need the $22-$25k, a loan could save you the E-W fee.
Generally, you can only take loans from a 401k if you are still working and contributing...once you leave a job, the loans need to be paid back pretty much immediately (think it's 30-60 days?). This is why they are risky...if you get laid off, you lost your income and the loan comes due.

An alternative to paying the 10% early withdrawal penalty if you don't meet the 55 yr old rule is a 72t plan. The big downside is it locks you in for a minimum of 5yr or until 59.5 and you are limited on how much you can take out per year.
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Old 20-12-2018, 01:28   #27
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Re: Early 401K withdraw for ACA

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KTP, thanks for the info. Question: if I have more than one 401k account, can I start constant continuous withdrawals from one without touching the others? Can I take, say, 20% of the account a year (starting at 55) so it is more or less depleted by the time I turn 60?
You can do it based on only 1 account (even if you have multiple) but the IRS limits it to 120% of the Mid Term Rate (currently works out to around 3.4%)...

What you could do is roll them into one account and then take out what you need (up to the limits)
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Old 20-12-2018, 05:02   #28
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Re: Early 401K withdraw for ACA

I read through but dont believe this was mentioned anywhere?
For an early , penalty free withdrawal, look Into. SEPP's , you do have to withdraw before 59 1/2
https://www.investopedia.com/article.../02/112602.asp
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Old 20-12-2018, 05:54   #29
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Re: Early 401K withdraw for ACA

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Someone paying too much in taxes finding a way to pay less is one thing. Someone paying little to no tax and instead making money off our tax system using loopholes to game the system for profit is enraging.

I agree, but General Electric is going to be around for a long time, so better get used to it.
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Old 20-12-2018, 08:32   #30
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Re: Early 401K withdraw for ACA

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Yikes! Does no one monitor content on this site? I came to it looking for practical knowledge. What I'm reading, in several cases is neither practical nor knowledgeable.
It's the internet. Discussions go off topic. That's what happens.


As to whether this is "gaming" the system or not, it's a legal way to reduce your taxes. Just like taking a deduction for mortgage interest payments, or charitable contributions. No difference at all. None of us set up the system, we just live with it. If you take ANY deductions to reduce your taxes, then you are "gaming" the system just as much as anyone else who follows the rules, and finds ways to reduce their taxes.
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