Planning Considerations
Consider strategies that lower MAGI and net investment income.
- Tax-deferred annuities: If you do not need income now and would like for some of your assets to continue growing tax-deferred, a nonqualified annuity allows you to defer the growth. Because no income is being paid out, the deferred growth will not be subject to NIIT. However, if you start taking distributions, the growth will increase your MAGI and may be subject to NIIT.
- Charitable giving: Gifts made to charities may lower your overall MAGI.
- Roth IRAs: Qualified distributions from Roth IRAs are not subject to income tax, so it will not increase your MAGI. o Municipal bonds: Income from these bonds is generally not included in MAGI.
- Your workplace retirement plan: Distributions from most 401(k)s, 403(b)s, and other employer retirement plans are not considered net investment income, but will increase your MAGI.