This is a good idea for beneficiaries of well-funded accounts, and it is especially useful for Roth account beneficiaries because the distributions are not subject to taxation. In estate planning and tax parlance, this practice is called “stretching an IRA.” That meant the beneficiaries of your IRA could elect to stretch distributions from your IRA over their life expectancy. With the enactment of the SECURE Act a life expectancy stretch is no longer possible. There is a new 10-year … [Read more...] about Can an IRA beneficiary keep the account active for any length of time?
When and if these changes are implemented, employers would be required to enroll all eligible employees into their retirement savings plans. The employees would have the right to opt out if they choose to do so. 401(k) catch-up contributions for workers 60 years of age and older would rise to $10,000, and the change would remain in place for the life of the worker if the Senate version is enacted. In the House Bill, the catch-up contribution increase would be limited to workers that are … [Read more...] about What are the other changes in these two pieces of legislation?
Before the enactment of the original SECURE Act, there was no age limit for Roth accounts, but traditional account holders had to stop making contributions when they reached the RMD age. Now, there is no age limit for either type of account holder as long as they are earning income. … [Read more...] about Is there an age limit for contributing into an IRA?
This is one of the parameters that has been undergoing changes. At the end of 2019, the SECURE Act was enacted. It raised the required minimum distribution age from 70.5 to 72. At the time of this writing, there is a piece of follow-up legislation in the House that is formally called the Securing a Strong Retirement Act. It is often referred to as SECURE Act 2.0. On the Senate side, there is another measure with similar provisions that is called the Retirement Security & Savings Act. … [Read more...] about When are traditional account holders required to take the distributions?
The answer is that it all depends on the type of account. There are required minimum distributions (RMDs) for traditional IRA account holders because the IRS wants to start getting tax money each time you receive a RMD distribution. Since taxes have already been paid, Roth individual retirement account holders are not required to take RMDs. … [Read more...] about From estate planning perspective, can you keep all the money in your account until you pass away?
A Roth IRA is funded with after-tax income. The IRS does not tax the same income twice, so distributions received from a Roth IRA are not taxable. On the other hand, contributions into traditional accounts are made from your income before taxes have been paid. The entire amount of any distribution from traditional IRAs are taxed at ordinary income tax rates. … [Read more...] about How does a Roth IRA differ from a traditional individual retirement account (“IRA”)?
You can make direct gifts or fund an irrevocable trust by gift to transfer assets out of your name with Medicaid eligibility in mind. However, you have to act in advance, because there is a five-year look back period. All divestitures must be completed at least five years before you submit your application for Medicaid coverage. If the five years has not lapsed, there will be a requirement to spend down assets. … [Read more...] about Can you make gifts to qualify for Medicaid?
Aside from the exempt property, all of the property that is owned by each individual in the marriage would be counted. However, the healthy spouse is entitled to a Community Spouse Resource Allowance (“CSRA”). The CSRA is half of the countable assets up to a limit that is just over $130,000 at the present time. There is also a Community Spouse Resource Allowance that is in the $26,000 range. Income that belongs to the spouse that is in a nursing home must be contributed toward the … [Read more...] about Does a healthy spouse get to keep their assets?
If you are a homeowner, the property does not count as long as its value does not exceed the equity limit. At the time of this writing, the equity limit exceeds $600,000, and the figure is updated annually to account for inflation. There is no equity limit if a healthy spouse is remaining in the home. The fact that you can qualify as a homeowner is positive on the one hand, but it is a situation that you want to avoid. In most states, Medicaid will seek reimbursement from the estates of … [Read more...] about What about your home?
There is a $2,000 limit on assets you can hold or own in your name. That said, there are some types of property that do not count. Wedding rings, engagement rings, and heirloom jewelry are not counted. In addition, an applicant can maintain possession of one motor vehicle. Furniture and other household items and personal belongings are not counted, and you can have unlimited term life insurance and up to $1,500 of whole life insurance. The same amount can be saved for final expenses, and … [Read more...] about What is the Medicaid asset limit?