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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 the 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 accounts are treated.  As is the case with most states, both Iowa and Minnesota consider retirement accounts as available resources subject to the Medicaid spenddown.

The community spouse is only able to retain the Community Spouse Resource Allowance (“CSRA”), an amount which for 2022 can range anywhere from $27,480 to $137,400 and can consist of retirement and non-retirement assets. The retirement accounts from the nursing home spouse and the community 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.

 

We have strategies to help protect qualified retirement accounts from the spenddown whether they are owned by a single Medicaid applicant, the community spouse, 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 Medicaid 4 You for a free consultation with a Medicaid planning expert.