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Roth IRA and medicaid and Regular IRA vs 401k

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  • Roth IRA and medicaid and Regular IRA vs 401k

    I have heard that if you have a roth ira it makes it more difficult to apply for NH since it counts as income without payout restriction, you cannot gift a roth ira other than through inheritance, if you cash it out it does not grow tax free

    with a regular ira it may effect the income penality to qualify for medicaid, so not sure how that plays a role or if putting it under a trust or a listing a trust would exclude income to the individual person.

    If you move to canada which has a tax treaty for roth ira with the US and you end up in a nursing home the cost is substantially less but not entirely free and you keep your roth ira and almost get a free lunch


    Any experience with this?

  • #2
    Sorry, other than New Hampshire, what is NH?

    EDIT: Never mind, was thinking National Healthcare since you mentioned Canada LOL. Realized it is Nursing Home, right? You are correct about the laws re: nursing homes. I think moving to Canada is an extreme response for an elderly and infirm person who needs nursing home care, as is forgoing a Roth at a younger age simply because of this rule. Better to PLAN AHEAD.
    Financial planning, investment management and CPA services for medical and high-income professionals | 270-247-6087


    • #3
      IRAs (Roth, Traditional, Rollover, or SEP) count as assets for the purpose of qualifying for Medicaid.

      The only way an IRA might affect income, for Medicaid qualification purposes, would be the fact that RMDs would be considered income.

      If the concern is to maximize assets for the healthy spouse following the spend-down, then Roth IRA assets should probably be the last assets to be spent. Reason being is that the level of assets to be preserved for the healthy spouse does not take into account taxes. So, if the healthy spouse can preserve $130,00 of assets; then preserving $130,000 of Roth IRA assets would leave the healthy spouse with $130,000 of purchasing power. But, if instead, the healthy spouse preserves $130,000 of TraditionalIRA assets (assuming a 12% marginal tax rate on the IRA distributions) the healthy spouse only retains $114,400 of purchasing power.

      All that said, if you’re wrestling with this issue, you probably need the services of a good elder law attorney.


      • #4
        Every assets need to be considered. For example a prepaid cemetery plot and funeral plan at exempt. Cash in the bank is not. No 5 year look back problem with that purchase.


        • #5
          I like the idea of moving to Canada as I am in my 40's and working there and getting health insurance and permanent residency and well as citizenship in Canada they have tax laws with the US for Roth IRAs. I would someone then to inherit the Roth IRA if that is possible. I have long term care insurance but only in America and only good for 3 years. I would have to die first for someone to inherit the Roth IRA unless it grows so large that it could sustain me or I have other finances for this purpose.


          If I move to Canada their nursing home care is more achievable than relying on Medicaid