Hopefully someone will correct me if I'm wrong, but I think there is no particular magic about using a tIRA for medical costs. Rather, the situation is that late in life, it is common to have a few years where your medical costs are so high that you end up far beyond the 7.5% AGI limitation, leading to a large itemized deduction, possibility to the point that you get pushed back into the 15% or even 0% tax band. Say if you're in a nursing home for medical reasons, then a very large fraction of your total yearly expenses may be deductible. In that case, you may be able to pull money from the tIRA tax free, which is better than whatever rate you would have paid on conversions 20 years prior.I'm assuming that the tIRA will grow to over 1M, but we'll see... Our pensions cover a lot of our expenses but we will need to tap our retirement funds on occasion. I did not know I could use tIRA funds for medical costs, how does that work?
Of course, there are a lot of caveats in this, so I wouldn't exactly call this consideration a "plan". Instead, I think of it more as a reason to not convert the last year or two worth of expenses out of the tIRA, as long as there are other larger accounts available to convert. QCDs are much the same consideration, I can imagine doing tens of thousands in QCDs, so that seems pretty reasonable to set aside.
Statistics: Posted by shess — Tue Sep 03, 2024 12:46 am — Replies 12 — Views 365