Listen to Lawrence…RMDs for IRAs as per The Secure Act and Community Medicaid Lookback Explained

May 7, 2020

Dear clients and friends,

The weeks seem to be flying by and each day gets us one day closer to the end of this pandemic. It makes it a bit easier to know that we are all going through this time together. Stay positive!

Here are some more of your questions and my responses:

I wanted to ask Lawrence a question about RMDs. If you have already been receiving RMDs, can you still not take the 2020 ones?

The new SECURE ACT that was passed late last year says that if you turned 70 1/2 before 1/1/20, then you had to start taking required minimum distributions (RMDs) by the first of April after the year in which you turned 70 1/2. You would then be required to continue to take RMDs every year thereafter. In spite of this rule that we are all familiar with, even if you have already started taking your RMDs, ALL RMDs ARE WAIVED THIS YEAR!

Interestingly, the SECURE ACT changed the required start date for RMDs to 72 for all those that turned 70 1/2 on or after 1/1/20. As such, no one who turned 70 1/2 after 1/1/20 will turn turn 72 this year and thus would not have had a RMD requirement in any event.

In your last message you say that the Medicaid look back for community Medicaid is now 2 1/2 years. It sounded like you were saying it is an improvement over past requirements. I’m under the impression, however, that previously there was no look back for community Medicaid so if this is a new law, it is actually worse. I don’t understand.

You are correct, it is much worse. What I said was “Also, with the new 2 1/2 year look back for Medicaid home care, you have an even better chance to protect your assets if you start the look back now.” What I was getting at here is that many people failed to do planning in the past because they relied on the fact that there was no look back for home care Medicaid. This is now not true, although the new look back does not start until October 1, 2020. My message is that you will have the best chance to protect your assets from the cost of home care if you start your look back and overall planning now!

I hope this helps.

Please pass this information to your family and friends and continue to keep your questions coming! If you are thinking about it, others are probably thinking about it too, so my answers will no doubt help you and many others. Let’s stay connected.