Medicare Premiums And Adjusted Gross Income -- Something For Mineral Owners To Consider -- November 18, 2017

A reader responded to my earlier note regarding Medicare. The reader's note:

I suspicion that many of your readers have some minerals and are above the basic limit for Medicare premiums, and have previously "sheltered" some income in an IRA.

Failing to monitor one's Adjusted Gross Income can be very, very expensive for these folks.

Look at the first link below as regards Tier Compression. If a retired married couple were to have, say, $320,001 of Adjusted Gross Income, BOTH their monthly premiums are increased by $214.30 per month, or $5,143 of after-tax cash!

One effective way to avoid this is to direct Required Minimum Distributions from an IRA to a charity in an amount sufficient to get under the ceiling number.

Taken to the extreme, a $2 contribution from the $320,001 above could yield a [savings of] $5,143 [in] part B premiums (these are after-tax savings). It gets even better when one factors in Part D.

This notion (actually a fact) is worth more, or less, at the other Tiered Levels.

The reader provided two links:

• Investment News, 2018 Medicare changes will erase social security COLAs for many (previously posted)
• Kiplinger, FAQs about giving your RMD to charity

Disclaimer: this is not an investment site. Not is is a "tax advice" site. I am simply posting a note from a reader to alert mineral owners of something that might catch them by surprise.

We've talked about this before. Folks with mineral rights in the "core" Bakken could be surprised by the amount of royalties they receive in any given month. At the beginning of the boom, it was just one well at a time, but now, if one has one producing well in the "core" Bakken, one could find themselves suddenly getting royalties from eight wells all at once, with pad drilling. This could seriously raise their annual income.

On another note, but along the same line. If one has wells in the "core" Bakken and one is not receiving professional advice from someone with strong background in oil and gas investments, this might be a good time to consider doing that. 

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Relaxing

Sophia, age 3 1/2 or thereabouts.