3622. Are IRA distributions subject to the 3.8 percent net investment income tax?Nuco EmployeeCaroline McKay532016-07-01T15:03:00Z2016-07-10T19:13:00Z11821044Albany Law School82122414Site Map/Individual Retirement Plans/Roth IRA/In GeneralSite Map/Individual Retirement Plans/Traditional IRA/In Generalindividual retirement account annuity2005-01-25T00:00:00ZTaxFactsDefaultArticleIs There a Difference Between Law and Ethics.pdfIs There a Difference Between Law and Ethics.pdf114670214-00-tf1.xml215.00;#1812;#1821;#0x010100C568DB52D9D0A14D9B2FDCC96666E9F2007948130EC3DB064584E219954237AF3900242457EFB8B24247815D688C526CD44D009C4E67E972694125ABDA91AC61F5E51FTax Facts 1When are funds accumulated in an IRA taxed?110100.000000000TaxFactsDefaultArticle2010-01-15T00:33:11ZSBMEDIA\moss-admin0f08e536-ecc3-4201-b7c3-d3285df31d4d|e397f4f8-7604-4866-8476-e67ae2709435|a90cf05c-5a5b-4c56-a862-0b028c69a6ba3622. Are IRA distributions subject to the 3.8 percent net investment income tax?Distributions from traditional and Roth IRAs are not subject to the 3.8 percent net investment income tax (aka also known as the Medicare contribution tax) imposed under the Affordable Care Act. The tax equals 3.8 percent of the lesser of a taxpayer’s net investment income for the taxable year, or the excess (if any) of the taxpayer’s modified adjusted gross income for the year, over a threshold amount ($200,000 for a taxpayer filing an individual return and $250,000 for a taxpayer filing jointly). Internal Revenue Code Section 1411 specifically excludes distributions from both traditional and Roth IRAs and other qualified plans from the definition of “net investment income.” Planning Point: While taxable distributions from traditional IRAs are not subject to the net investment income tax, they do increase a taxpayer’s MAGI modified adjusted gross income (MAGI) for the year. A higher MAGI may expose taxpayer’s other investment income (or increase taxpayer’s exposure) to this 3.8 percent tax. Planners should consider the effect of an IRA distribution on a client’s MAGI and exposure to the net investment income tax.