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IRA DISTRIBUTIONS COULD BE DETRIMENTAL TO RECEIVING VETERANS PENSION BENEFITS

Many wartime veterans or their surviving spouses who become disabled (for reasons other than wartime service) are entitled to a benefit to help pay for costs of care (most commonly if the veteran or their surviving spouse is in an assisted living facility). Although the Medicaid rules are different, this type of veteran’s benefit is similar to Medicaid as it is “means-tested”. However, unlike Medicaid, there is a limit of $127,061 of countable resources in year 2019 (whether the claimant is single or married). Unlike the Medicaid rules (see our article in this month’s E-Letter), the retirement accounts always count as a resource toward that limit. However, there is one more problem for those applying for a VA pension who own a retirement account. When calculating if the applicant qualifies to be under the $127,061 resource limit, the VA also calculates the amount of annual income the applicant receives (minus medical expenses such as an assisted living facility cost). Typically, the income of the applicant consists of their Social Security or pension income. However, when one takes a distribution out of his or her retirement account, this would be considered as income. Thus, if there was too large of a distribution (along with Social Security and pension income) whereby the income of the applicant exceeded his or her medical expenses, then that annual amount would count towards the $127,061 recourse limit. Therefore, a potential VA applicant must be mindful of what asset they use prior to applying for VA pension benefits.

If you are interested in learning more please sign up to attend our free “Estate Planning Essentials” workshops either on Thursday, February 28, 2019 at 1:00 p.m. or Saturday, March 16, 2019 at 10:00 a.m. by calling (214) 720-0102 or signing up online at www.dallaselderlawyer.com.

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