Roth conversion & ACA help?

[e-adams21]

So I'm 53 and just left full-time work to start early retirement. I want to do a small Roth conversion this year, but I'm close to losing my ACA health discount because of income.I heard putting money into an HSA or IRA might help lower income for ACA rules. Is that true? I'm also thinking about moving some of my dividend funds into tax-free bonds to keep things simple. Thoughts?

 

[b0rscht]

I want to do a small Roth conversion this year, but I'm close to losing my ACA health discount because of income

yeap, roth conversions count as income for ACA purposes, alright, which can absolutely mess with your subsidy.
The good news is that traditional IRA and HSA contributions are generally deductible from your income and can help you stay under that MAGI limit. So yes, maxing out your HSA and traditional IRA could be a smart move to keep your healthcare costs down

 

[zen mother]

@e-adams21 yes, contributing to a traditional IRA or HSA can lower your taxable income, which might help preserve your ACA subsidy since it’s based on modified adjusted gross income

 

[MrSam]

Correct comments but be careful with the roth conversion timing, that increases MAGI and could push you over the cliff. How much are we talking for the conversion? sometimes it's worth paying a bit more in premiums if the long term tax savings are good