In our Roth vs. Traditional article, we made the case that — for someone managing a benefits cliff — Traditional is the account that matters. Only Traditional contributions reduce your MAGI, the number Medi-Cal actually checks.
To be clear: that doesn't mean Roth is a bad account. Roth IRAs are excellent — your money grows completely tax-free, forever, with no tax owed on withdrawals in retirement. For most people, most of the time, Roth is a perfectly reasonable choice.
But for the specific purpose of navigating the benefits cliff, Traditional is the more helpful tool. If keeping your family's Medi-Cal coverage this year is the priority, a Roth contribution simply doesn't do that job — no matter how good the account is in other ways.
"Roth is a great account. Traditional is the right tool for this job. You can have both — just make sure the contributions that need to protect your benefits are in the right one."
So what if you already put money into a Roth?
Here's the scenario: maybe you opened a retirement account earlier this year, the app or bank defaulted you into a Roth, and you've been contributing to it without knowing about MAGI. Now you've found this calculator, you've realized your MAGI is over the threshold for Medi-Cal — and the contribution that could have fixed it is sitting in the wrong account.
You're not stuck. There's a process called recharacterization — an IRS-sanctioned way to reclassify an IRA contribution from one type to another, even after the money is already in the account.
It switches the account type — for a contribution you already made
Your brokerage moves the money (along with any investment gains or losses) from your Roth IRA to a Traditional IRA. For tax purposes, it's treated as if you'd contributed to the Traditional IRA from the very beginning — which means it reduces your MAGI for that year, retroactively.
What this looks like
The money itself doesn't disappear or change hands in any complicated way — it's the same dollars, the same investments, just reclassified. What changes is how the IRS (and therefore Medi-Cal) treats that contribution for the year.
The deadline — and why there's likely more time than you think
This means if you contributed to a Roth at any point last year and you're only realizing the MAGI issue now — while doing your taxes, or after finding this site — you likely still have time to fix it, especially if you or your tax preparer file for an extension.
How to do it
Use the calculator to confirm the amount
Enter your income and household size into the benefits cliff calculator. It shows your MAGI threshold and how much your MAGI needs to drop to qualify. This tells you how much of your Roth contribution needs to move — sometimes it's the full amount, sometimes less.
Call your brokerage
Tell them you'd like to recharacterize a prior-year Roth IRA contribution to a Traditional IRA. This is a routine request that Fidelity, Betterment, Schwab, M1, and other major brokerages handle regularly — usually by phone or a simple online form. If you don't already have a Traditional IRA there, they'll typically open one as part of the process.
Money moves, tax forms follow
The brokerage transfers the contribution (adjusted for any gains or losses) to your Traditional IRA, and issues updated tax forms (such as a 1099-R and 5498). If you're working with a tax preparer, let them know — it affects how the contribution is reported.
Recheck your MAGI
Run your numbers through the calculator again with the contribution now correctly counted as Traditional, and confirm you're under your threshold.
California DHCS Income & Deductions Chart
For the official breakdown of what counts as income — and what doesn't — for Medi-Cal eligibility, see the California Department of Health Care Services income determination chart. This is the document your county worker uses.
Confirm deadlines and rules with your brokerage and a tax professional
This article describes how recharacterization generally works, but exact deadlines, forms, and eligibility can depend on your specific situation and current IRS rules — and rules can change. Call your brokerage's support line and ask specifically: "Can I recharacterize a Roth IRA contribution from [year] to a Traditional IRA, and what's my deadline?" A qualified tax professional can confirm how this affects your specific return.