Can I put an IRA into a Medicaid asset protection trust?

Can I put an IRA into a Medicaid asset protection trust?

Short answer: Not directly. An IRA must be owned by the individual, so moving it into a trust means withdrawing it, which is taxable and starts a new five-year look-back.

Figures change periodically. Double-check current amounts before relying on them.

An IRA is an individual account; the law does not allow it to be owned by a trust during the owner’s life. To move IRA money into a Medicaid asset protection trust (an irrevocable trust), the owner would have to withdraw the money first. That has two consequences:

  • Income tax. The withdrawal is generally taxable income in the year it is taken, which can be large.
  • The look-back. Funding an irrevocable trust is a transfer. If the person applies for Long-Term Care Medicaid within five years (in most states), the transfer can cause a penalty.

A trust can, however, be named as the beneficiary of an IRA, so that the account passes to the trust at death. That does not protect the IRA during life.

Alternatives families consider include leaving the IRA in place if the state exempts it in payout status, taking distributions over time, or spending withdrawals in allowed ways. The right choice depends on the person’s age, health, tax bracket and state rules, so both a Medicaid planner and a tax professional should be involved.

Getting help

Every situation is different, and small facts can change the answer. If this question affects a real decision, especially with a spouse at home, a home, gifts or a trust, a Certified Medicaid Planner can apply your state’s rules to your situation. As a rough guide, published fees for help with an application range from about $500 to $6,000, and hourly help from about $150 to $600.

Last updated for 2026. General information only, not legal or financial advice. Medicaid Answers is a free educational resource published by Medicaid Answers Foundation.

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