What is a 401H Retirement Plan?
Rolling over money from a traditional IRA or 401(K) to a 401H retirement plan is a great way to pay for health care. This type of plan offers several unique benefits. For example, you can take unlimited withdrawals for health care. And those withdrawals will not impact your social security benefits.
Keep reading to learn more.
What is a 401(H) Retirement Plan?
A 401(H) retirement plan is called a “401(h) plan”. It is a type of employer-sponsored retirement plan that allows employers to offer additional benefits to their employees. Examples of benefits include tax-free contributions and the offer of tax-free withdrawals. With this account, you can take an unlimited amount of deductions. These deductions do not count as Modified Adjusted Gross Income (MAGI) for determining Medicare premiums or surcharges. The 401H account also allows greater control over managing and investing funds. It also provides advantages, including potential tax savings and potential appreciation in value.
These plans are governed by section (h) of 26 U.S. Code § 401.
How Are Contributions Structured Within a 401(H)Plan?
You can increase or decrease your contributions based on your needs. This makes it easier to adjust your contributions over time.
Determine if You Qualify for Tax Advantages with a 401(H) Plan.
With a 401(h) account, you can take unlimited deductions, including the offer of tax-free contributions and proceeds. Investing in a 401(h) retirement plan can help you save more. At the same time, you also enjoy the potential tax advantages it offers.
How To Roll Over Your Qualified Retirement Plan to a 401(H) Plan.
Rolling over your accounts is a great way to get the most out of your 401(h) Retirement Plan and take advantage of its tax advantages. First, contact your qualified retirement plan institution, such as an IRA or employer-sponsored account. The institution will provide you with a rollover form, which you’ll fill out and submit with copies of the account beneficiary designations for each qualified retirement plan. Once you submit your paperwork, your prior employer-sponsored plan or IRA will transfer the funds to the new 401H Retirement Plan. Depending on the provider, there may be fees associated with this transfer process.
We can provide a customized 401(H) Plan for you.
If you don’t find a 401(H) provider that makes sense for you, call us. The cost of setting up your plan is way less than what you could lose in social security benefits and taxes.
SSA Does Not Consider Withdrawals From Your 401(H) Plan As Income For IRMAA.
Withdrawals from your 401(H) Retirement Plan are not considered income for IRMAA (or Medicare) calculations. Any withdrawals are excluded from consideration when determining your IRMAA annually. This means that if you draw on your 401(H) plan, it won’t affect the amount of your Social Security benefits. In other words, the Social Security Administration will not count the withdrawal as income when calculating your Medicare premium.
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