Key Takeaways
- A married Reddit poster in their mid-40s who is weighing a big-tech buyout has $882,000 of deferred pay due over about five years, or $176,400 a year if it’s paid evenly.
- Marketplace coverage gets the Premium Tax Credit only if household income is no more than 400% of the federal poverty line, and that cap applies again for tax years after 2025.
- For a couple buying 2027 coverage, the 400% line is $86,560, so the deferred pay alone would put them over it in every payout year.
- Any advance credit that turns out too high has to be paid back in full, so the family should budget full-price premiums until the deferred pay ends.
If you’re planning to leave a big employer with money still sitting in a deferred compensation plan, I have some unwelcome news. You may pay full price for health insurance until the last payment arrives, since those payouts count against the Affordable Care Act’s income cap, and that cap is back.
A married poster in their mid-40s laid out exactly this setup in Reddit’s r/Fire forum at the end of October. The poster is weighing a buyout from big tech, with layoffs looming and burnout setting in, and wrote: “I have to make a decision in the next few weeks about taking a buyout.”
The household has about $4.67 million of financial assets, a paid-off home and no debt. It also has $882,000 of deferred compensation, before tax, that pays out over about five years after the poster leaves. Paid evenly, that’s $176,400 a year ($882,000 ÷ 5).
The poster puts the family’s spending at about $105,000 a year lean, or $177,000 for the full lifestyle, before income taxes. So the deferred pay alone would come close to funding the full version for five years. And the poster says that budget already includes health insurance, plus the occasional year at the max out-of-pocket.
6 safe dividend stocks paying retirees 6%+ yields
There are over 100 stocks paying 6%+ annual dividends today.
But after an extensive investment review leveraging TIKR’s proprietary data, we now believe only six of them are truly safe for retirees.
They’re all yours for free as part of our new investment report, which you can access right here.
The 400% line is back
Under the IRS’s rules for the Premium Tax Credit, Marketplace coverage qualifies only if household income for the year is at least 100% and no more than 400% of the federal poverty line for the family’s size. Congress lifted that cap for tax years 2021 through 2025 only, so it’s in force again this year, and no extension had passed by the time open enrollment for 2027 coverage opened on Nov. 1.
Deferred pay counts toward that income once it’s paid out. The credit’s household income starts from the AGI on the tax return, and payouts from a nonqualified deferred compensation plan go on the return as income. Employers report them in box 1 of the W-2, the same box as wages, as well as in box 11.
Every payout year clears the line
For 2027 Marketplace coverage, the poverty line comes from the guidelines HHS published in January 2026, since the credit uses the ones out on the first day of open enrollment. Say the household is just the two of them and the first payment lands next year. For a household of two in the contiguous states, the guideline is $21,640, which puts the 400% line at $86,560 ($21,640 × 4).
At $176,400, the deferred pay alone would put the couple at more than eight times the poverty line, and almost $90,000 over the cap. That’s before a dollar of dividends or interest from their $1.67 million brokerage account. HHS updates the guidelines every January, but the line would have to more than double to catch up with a $176,400 payout.
Leave the advance credit alone
Open enrollment for 2027 coverage runs through Jan. 15 in most states, and Dec. 15 is the deadline for coverage that starts Jan. 1. Advance credit payments rest on the family’s own estimate of the year’s income, so that estimate has to include the year’s deferred payout. Any advance credit that turns out too high comes back in full at tax time, since there’s no repayment cap for tax years after 2025. So in a year when the payout alone runs roughly double the line, the family shouldn’t take a dollar of credit in advance, and should plan on full-price premiums.
This won’t sink the buyout
Of course, a family with $4.67 million of financial assets can pay full price for health insurance, and the poster has already put it in the budget. Frankly, I wouldn’t turn down this buyout over five years without the credit. But the health line in that budget should carry the full premium for every payout year. Both of the poster’s retirement tools put the plan around a 75% success rate, so that’s worth going over with their financial planner.
After the fifth payment, though, the family could have a shot at the credit again. At around 50, they’d still have about 15 years before Medicare, and with the deferred pay gone, they could plan their withdrawals around the line. Congress could also change the cap before then: the House passed a three-year extension of the wider credit in January 2026, but the Senate hasn’t.
Enjoy your retirement in style with these safe 6%+ dividend yields
Dividends can hold the key to enormous wealth. But only if you buy the right ones.
Picking the right high-yield dividend stock can be the difference between a dream retirement…and scraping by every month, waiting for the next Social Security check to clear.
We’ve identified six stocks yielding 6%+ that we believe every retiree should know about right now.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
