IRA Club

Avoid the New 3.8% Medicare Surtax: IRA Club Announces New Strategy

IRA Club announces a strategy to legally avoid the 3.8% Medicare Surtax.


Chicago, IL -- (SBWIRE) -- 08/09/2012 -- The IRA Club has announced a strategy where you can easily avoid the new 3.8% Medicare Surtax on net unearned investment income by making your investments inside a Self Directed IRA.

To help pay for the Affordable Health Care Act starting January 1, 2013, Congress has created another new tax: the 3.8 Medicare surtax; this one on net investment income. The rate will be 3.8%.

According to Dennis Blitz of the IRA Club, "People will be subject to the 3.8% Medicare surtax if they are among the “new rich” (Adjusted Gross Income (AGI) over $200,000 for an individual filer or AGI over $250,000 for joint filers)". The 3.8 Medicare surtax will be computed by adding all the items below and multiplying by 3.8%:

Net Capital Gains
Interest Income
Dividends Income
Any Annuities income
Royalties Income
Rent income
Times 3.8%

Investment income is included when the above computation is made. Example: if a person is a joint filer and they, along with their spouse earn $220,000 (less than the threshold amount when the tax would kick in), plus they earn $35,000 net investment income, they would be charged the 3.8 Medicare surtax because the investment income pushed them over the threshold amount.

Is there any good news? YES! If a person earns their investment income inside an IRA the 3.8% Medicare surtax does not apply.

Let’s assume that someone has a Self Directed IRA and the annual cost to maintain the account is $280.

Now let’s assume they make just one transaction in that account which earns just $15,000. The savings based on the savings of the 3.8 Medicare Surtax is $570. This does not include the benefit of deferred income tax that IRA accounts enjoy.

The IRA Club located in Chicago, IL, helps people throughout the country setup and legally administrate all types of self directed IRA's. The IRA Club was founded by Dennis Blitz who gained recognition during a thirty year career as a leader in the field of financial education for financial professionals.

For specific information about how this can apply to your finances, please visit: or call Dennis Blitz directly at: 312-795-0988