The Listen to Lawrence Letters: IRAs, ROTH IRAs and CDs

June 12, 2023
March 21, 2023 • Volume 4 Issue 124
Here are two topics we have covered in the past, but are important enough to revisit…


Is the regular IRA & the ROTH IRA protected from nursing homes?


The answer is yes and no. ALL retirement accounts are considered exempt ASSETS from Medicaid, provided they are in pay status. Pay status essentially means that you are taking out required minimum distributions (RMDs) based on Medicaid’s life expectancy tables (not the usual IRS tables). Note that you would be required to take out the RMDs even if you are younger than 73 and even if it is a ROTH IRA. Unfortunately, Medicaid’s RMD is considerably higher than the IRS’s RMD.

The bad news is that the RMD is considered INCOME for Medicaid purposes, which is not protected from the nursing home. So the answer is the retirement asset is protected but not the income. Got it?


Also, can cash from an existing trust be put into a CD? Thank you in advance for your help.


I believe the question here is that if a trust has a bank account, can the trustee move the bank account money into a new CD, still held in the name of the trust? The answer is that the trustee can essentially invest trust money in ANY legal investment (not horse number 4 at Belmont), including a CD, unless the trust specifically limits trust investments (not usually the case).

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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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.

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Stay safe!