Answer: Keeping your IRA depends on what state you reside in. In Rhode Island, you are allowed to keep your IRA, provided you anuitize it. In Massachusetts, you are not allowed to keep it.
To protect your Roth or Traditional IRA’s, you do need to annuitize the IRA and start drawing the minimum required distribution from them. If you do not annuitize them, they will be deemed an available resource and will need to be liquidated and spent on your care.
Rhode Island Department of Human Resources Regulation 0382.15.30 regarding Retirement Funds (REVISED: 06/1994) provide as follows:
“Retirement funds are annuities or work related plans for providing income when employment ends (such as a pension, disability or retirement plan administered by an employer or union), or funds held in Individual Retirement Accounts (IRA’s), or plans for self- employed individuals, sometimes referred to as Keogh plans.
An applicant who owns a retirement fund must apply for the benefits of such fund or liquidate the fund. However, the applicant is not required to terminate active employment in order to make a retirement fund available. If the applicant must terminate employment in order to receive benefits from the retirement fund, the fund is not accountable resource.
If the applicant is eligible for periodic retirement benefits (monthly, quarterly payment,etc.), the retirement fund is not a resource, but the payments from the fund are unearned income when received.
If an applicant owns a retirement fund and is not eligible for periodic payments, but has the option of withdrawing the funds, the retirement fund is counted as a resource. The resource is the amount the applicant can actually withdraw from the account. If there is a penalty assessed for early withdrawal, the resource is the amount available after these penalties are deducted. If taxes are owed on the funds, any taxes due are NOT deducted in determining the value of the retirement fund”.
Though the funds themselves are protected from liquidation, the income stream generated from them are deemed income and an available resource and available to a person on Medicaid.
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