Are Retirement Accounts (IRA/401k) Protected from Medicaid in Payout Mode?

How to leave a lifetime of income to a beneficiary?

In this episode, Chris Berry answers the question, How to leave a lifetime of income to a beneficiary upon death?



Estate Attorney and Advisor Chris Berry of Castle Wealth Group answers questions on retirement and estate planning every Wednesday at 1pm. Register via this link or give our office a call at 844-885-4200.

Castle Wealth Group and Christopher Berry help families with estate planning, elder law, retirement planning, and tax planning from their offices in Brighton, Ann Arbor, Livonia, Bloomfield Hills, and Novi.

Castle Wealth Group helps families with their legal, financial, and tax planning for their retirement and legacy.

With the use of legal structures like revocable living trusts, Castle Trusts (asset protection trusts), Chris Berry and Castle Wealth Group can help your family plan, protect, and preserve what is important through their Retirement and Legacy Blueprint Process.


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Episode Transcript

IRA’s, 401ks: are they protected from Medicaid when in payout mode welcome to Berry’s Bites, please join our host attorney and financial advisor Chris Berry. So, a little background on this question the way Medicaid works is Medicaid will pay nursing home care but to qualify for Medicaid a single individual can only have two thousand dollars worth of countable assets a married couple they would make you spend on your money and at most you could have a hundred and twenty thousand dollars of countable assets. 

And so the question is what are accountable assets, accountable assets are everything other than a home automobile small cash value of life insurance personal belongings prepaid funeral. Everything else is basically a countable asset so if that’s the case then what about retirement accounts so retirement accounts are countable assets whether they’re in your name or whether they’re in the spouse’s name, they’re still accountable asset. But some states and I can’t tell you which state’s off the top my head but some states a lot of the Southern states like Florida or Georgia if your IRA is already paying out due to required minimum distributions then the IRAs or 401ks are not countable assets so if IRA are in payout mode that retirement account is protected in some states unfortunately in Michigan. 

The answer is no that these IRAs are not protected 401ks even if they’re in payout mode are not protected so that’s why when we’re doing asset protection planning either pre-planning a lot of times we’re paying down we’re paying the tax on the IRAs ahead of time to move them into the trust or if we’re doing Medicaid crisis planning we have a loved one in nursing home right now we still have to plan for the IRAs 401 case so long story short IRAs are not protected. Thank you 

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