Elder Law Answers
Taking Money Out of Tax-Deferred Retirement Accounts
Uncle Sam has strict rules on when you can and, later, must begin withdrawing funds from tax-deferred retirement accounts...
Read moreShould Medicaid Applicant Move Money Out of IRA?
- May 28th, 2024
Q
Most of my parents’ money is in an IRA that is in my dad's name. My mother has very few assets in her name. He is older and may need to go into a nursing home in a few years. He has a Roth IRA worth $100,000. He is considering taking the money out of the Roth and putting it in an account in my mom's name. It won't grow tax-free anymore, but it will be under her name. Is this a good idea? Or does his Roth count as a "couple's asset," so that she would be able to retain $130,000 when he becomes eligible for Medicaid? And if moving it is a good idea, would it fall under the five-year lookback period for transfers?
A
Yes, it makes sense to move the Roth IRA into your mother’s name. But there is probably no advantage to doing so ahead of time because it can be done when and if your father needs care. Just make sure someone has a durable power of attorney for your father to be able to take this step when and if the time comes.
The Roth IRA would fall within the approximately $137,000 (figure may be higher in some states) that the community spouse may retain and still get Medicaid coverage for the nursing home spouse. However, all but $2,000 of this money must be in the healthy spouse’s name. So, if your father needs nursing home care, the funds will have to be transferred to your mother.
Again, this doesn’t need to be done in advance. That is because the five-year lookback period for transfers of assets does not apply to transfers between spouses.
Last Modified: 05/28/2024