RetireSmartIRA

2.3: Choose How You Pay Conversion Tax • New: decide how each Roth conversion's tax gets funded. Withhold it from the conversion, pay it from your other accounts, or pay it from money outside the plan. Existing plans keep the behavior they already had.
• Federal withholding is applied against federal income tax only. State tax, IRMAA, NIIT and ACA amounts are funded separately rather than netted against a federal overpayment.
• Pennsylvania: the share of a conversion withheld for federal tax is treated as PA-taxable, following PA guidance.
• New funding check: a year whose tax cannot be covered by your taxable and IRA balances is now marked, with the reason on the row and a count at the top of the plan. This is a new check rather than a change to the math, so some existing plans will start showing it.
• Under 59½: the 10% early-distribution penalty is not modeled, and a note now says so where it could apply. Accuracy improvements
• Refined how Social Security becomes taxable at lower provisional income, and a withdrawal taken to pay your tax bill now counts toward that calculation.
• Medicare IRMAA income now follows Medicare's own definition, which does not add back the untaxed portion of your benefits.
• Withdrawals taken to cover a tax bill now solve to the dollar, so ending balances reflect everything actually withdrawn.
• ACA income now includes a withdrawal taken to pay tax.
• Required withdrawals: spouse-owned and jointly held accounts are attributed correctly, and the projection chart's year labels are easier to read.