Solo 401k and MAGI for obamacare Affordable Care Act

QUESTION: Might you have any new info regarding your solo 401k product and MAGI for Obamacare? I`m interested in moving forward with you.

ANSWER: It is our understanding that to determine eligibility for a subsidy, the government uses modified adjusted gross income (MAGI), line 37 of Form 1040.

As the law is currently written, none of the above-the-line “adjusted gross income” items are added back — the only add backs to AGI are untaxed interest, the untaxed portion of social security benefits, and income protected by the foreign earned income exclusion.  Here is the exact language from the statute (26 USC 36B):

The term “modified adjusted gross income” means adjusted gross income increased by—

(i) any amount excluded from gross income under section 911,

(ii) any amount of interest received or accrued by the taxpayer during the taxable year which is exempt from tax, and
(iii)  an amount equal to the portion of the taxpayer’s social security benefits (as defined in section 86 (d)) which is not included in gross income under section 86 for the taxable year..
As such, solo 401k contributions are reported on line 28 of Form 1040 which in turn reduce the AGI.

With the current state of the government, the regulations may change in the coming year(s).


Tom in PA

About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>


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