The Listen to Lawrence Letter: Should I transfer tax deferred assets to an irrevocable trust for Medicaid planning purposes?

February 6, 2023
January 6, 2023 • Volume 4 Issue 105
Dear Clients and Friends,
Here is another retirement plan question:


Does it make sense for Medicaid planning purposes to transfer tax-deferred assets (IRA, 401K) to an irrevocable trust?


The answer is NO! Don’t even think about it. And this answer is true for any type of trust, revocable or irrevocable. The transfer of a retirement plan (IRA, 401K, 403B) will destroy the plan and trigger the income tax on the full account. OUCH!

However, this is not a problem as such retirement plans are exempt as an ASSET from the Medicaid rules. On the other hand, an amount must be withdrawn from the account each year based on the life expectancy tables (not IRS tables) as provided by Medicaid. This withdrawal is considered INCOME and is subject to Medicaid’s income limitations.

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

And, if anyone you know would like to receive this

Listen to Lawrence Letter, just have them email me at and I’ll add them to the list!


As always, please send me your questions. If you are thinking about it, others are probably too, so my answers will no doubt help you and many others.

Let’s stay connected.

Stay safe!

Until next time...peace, health and happiness. Lawrence Eric Davidow