7 IRA mistakes to avoid
Forgetting about Medicare
One challenge in retirement planning is that several things that don’t seem like they’d be related are interconnected. Medicare Part B is additional Medicare coverage for which you pay a modest premium. For most Americans that is $104.50 for 2014. But if your income jumps above certain levels — $85,000 in adjusted gross income for single taxpayers – your premium increases.
"It mostly happens for single people," says Certified Financial Planner Erin Baehr. "Say you take $20,000 out (of an IRA) to help your child buy a house, and you go over the income limit by even a hundred dollars, you’re premium is going up."
The premiums for Medicare Part D, which provides drug benefits, also depend on income, although they’re smaller overall. The thing to remember is that you need to examine the consequences of any large withdrawal of money that’s going to change your income in the eyes of Uncle Sam.