There are many different types of qualified retirement accounts, such as IRAs, 401(k)s, 403(b)s, Keoghs, TSAs, etc. The differences between them are mainly in their origination, but they all share distinctive characteristics of tax deferral and taxation of withdrawals.
There is a lack of consistency among the state Medicaid programs as to how the qualified account is treated. Most states consider the entire value of the account as an available resource. Pennsylvania is rate in that it is one of the few states that excludes qualified retirement accounts, but only if they are owned by the community spouse.
The community spouse is able to retain both the Community Spouse Resource Allowance (“CSRA”) which can be anywhere from $25,728 to $128,640 in addition to the full value of their retirement accounts. The retirement accounts from the nursing home spouse must be either spent down completely or a portion of it cashed out and given to the community spouse to keep as part of the CSRA – usually costing thousands of dollars in unnecessary taxation.
At Goldblum Sablowsky, we have strategies to help protect qualified retirement accounts from the spenddown whether they are owned by a single Medicaid applicant or nursing home confined spouse. We balance both the tax and Medicaid spenddown issues to give a client the maximum protection of the asset possible from both taxes and the Medicaid spenddown.
If you are facing a Medicaid spenddown and are worried you might have to spend down your qualified retirement account, contact us for a free consultation.