Why a Roth IRA May Be Better Than an IRA If You Need Medi-Cal

Before January 1, 2024, in order for a retirement account to be exempted as a countable asset, a periodic distribution had to be taken from the account. 

This meant that distributions from a Roth IRA and an IRA would go to the Share of Cost. 

However, with the regulation change starting January 1, 2024, the countable asset threshold has been eliminated. 

This means that any retirement account is now automatically exempted for qualification. 

IRAs, however, still have to satisfy IRS mandated minimum distribution requirements thereby possibly depleting the account over time.

This income will go to the Share of Cost. 

Roth IRAs, however, have no RMD requirements.   

The Roth IRA balance continues to potentially grow tax-free over time. 

Don’t forget the recovery rules haven’t changed so you must have designated beneficiaries in order to avoid probate and recovery.

We recommend people not a living trust, in most cases, to be the designated beneficiaries. 

This means that more could potentially go to your beneficiaries after death with a Roth IRA than with an IRA.