The Listen to Lawrence Letter: Medicaid and ROTH IRAs

March 20, 2024
March 21, 2024 • Volume 5 Issue 227


Hi Lawrence,

We were wondering, if we were to go into a nursing home, could Medicaid take the money from our Roth IRA? Also, what amount can we gift to our children from our Roth IRA without tax consequences on either side?

Finally, would doing this affect our five-year lookback?

Thank you for helping with this. Be Well.


There is a lot of confusion when it comes to ROTH IRAs. Everyone seems to think they enjoy some special exemption. The truth is they do and they do not.  IRAs, including Roth IRAs, are not automatically exempt from Medicaid, meaning Medicaid could, in theory, get your IRAs. However, if you put your IRA, including your ROTH IRA, in pay status, then the principal amount in your IRA is exempt as an asset. BUT, IT IS NOT EXEMPT AS A SOURCE OF INCOME FOR MEDICAID. The RMDs (required minimum distributions) must still be withdrawn from the IRA and they count as income that Medicaid may be able to get. The RMD is not the amount you may be used to from the IRS tables, but rather from the Medicaid tables, which are more generous to Medicaid.

But wait! “I thought I did not have to take out RMDs from my ROTH IRA?” The answer to this is that you do not have to take RMDs from ROTH IRAs for income tax purposes, but you do for Medicaid purposes.

Similarly, gifts of money from your ROTH IRA to your children will not be subject to income tax (for you or them) but they will be subject to a five-year lookback for Medicaid.

I hope this helps! Please forward this information to your friends and relatives to share these informative answers to some very commonly asked questions.


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