When it comes to IRAs, it seems the strategy people most opt-in for is to withdraw the minimum required amount in order to defer paying taxes for as long as possible. Unfortunately, while this strategy seemingly saves tax dollars now, it may ultimately cost more in tax dollars later when they decide to do asset preservation planning to protect their assets, which includes their IRAs, from long-term care costs.
In this Elder Law Minute, Wes Coulson, Southern Illinois Elder Law attorney, continues with the series on Asset Preservation Planning and discusses IRAs and the importance of looking ahead when developing a withdrawal strategy.
IRAs and Asset Preservation Planning
Hi, I’m Wes Coulson and this is your Elder Law Minute. I want to talk today about IRAs and long-term care asset preservation planning.
It seems like that the strategy that most people follow when it comes to IRAs is just to take out the required money so that they can defer paying the taxes for as long as possible. Well, let me tell you my perspective as an Elder Law attorney. There are situations in which somebody comes to me for planning after they’ve followed that strategy for a long time and now they are ready to go into, or they’re a few years away from going into, a nursing home and in order to protect that IRA money, we’ve got to move it all out of their name.
Unfortunately, that means withdrawing it, and if we’re having to withdraw a whole lot of money from IRAs in a short amount of time, that’s going to wind up putting some of those withdrawals at a very high tax rate.
So, sometimes it’s better to look ahead to that as you get older. Take more out from the IRAs than you are required to as a minimum. Certainly something to talk to your Elder Law attorney and to your professional tax advisor about. Thanks.
For more information on IRAs and Asset Preservation Planning, visit these articles:
- What you can and can’t keep with Medicaid: IRAs and Other Retirement Assets
- Differences Between Traditional IRAs and Roth IRAs
- IRAs Can Be Planning Time Bombs
“Your Trusted Advisor on the Elder Care Journey”
Coulson Elder Law is dedicated to providing families in the St. Louis area with their Elder Law needs. Our practice areas include Asset Preservation Planning, Veterans Benefits, Medicaid Eligibility, Alzheimer’s Planning, Special Needs Planning, Estate Planning and more. We understand the financial challenges you may face as you and your loved ones grow older. At Coulson Elder Law, our clients’ well-being is our number one priority. For immediate help, call (877)995-6876 or Contact Us and we will get in touch as soon as possible.