In order to understand how modified adjusted gross income works from an investment perspective, each different bucket of investment works a little bit differently. The tax-deferred bucket, which includes things like IRAs: When you take money out of this bucket in retirement, generally speaking, a hundred percent of the distributions are taxable and a hundred percent of the distributions count towards modified adjusted gross income as it applies to your health insurance costs. Generally, anything from the tax-free bucket, which includes things like Roth IRAs: Roth generally qualified distributions from this bucket do not count towards modified adjusted gross income and are not taxable. And the basis taken out of non-qualified investments, which would in basically non-qualified investments means it's not in a retirement plan like one of the plans mentioned here.

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