Personal Finance (Not Investing) • Inherited IRAs in special needs trusts and SSI

My questions are:

Would that $9000 in RMD income affect the adult child’s SSI or Medicaid eligibility, or eventually SSDI DAC? In other words there are income limits to receiving SSI - would RMD income go against those income limits?

(Trying my hand at this, not an attorney or an accountant, just a parent that reads a lot on disability prigram rules)

It all depends how that income is distributed. If cash to the beneficiary, or for food and shelter then they may very well count as income to the beneficiary according to the means tested public benefit agency.

For SSI presumably the money would need to be spent to stay under $2000 asset limit. What can the money be spent on? I don’t think it can be spent on food or shelter, correct?

If the bills are paid directly to third party vendors, then there should be no penalty presuming they are allowable expenses. However if they are used for food and shelter SSA will apply a max 1/3 presumed value reduction to SSI. Food and shelter distributions may or may not be counted as income by Medicaid, it depends on the type of Medicaid they are on.

Could the $9000, or some portion of it, be moved into an ABLE account?

Yes, subject to the ABLE annual contribution limit from all sources.

I assume the money could be left in the trust (accumulation trust) but it would be taxed at trust tax rates.

Correct. Unless it is a Roth RMD, which is not taxed. More reason to convert to Roth.

Statistics: Posted by startabatha — Tue Jul 09, 2024 10:22 am — Replies 12 — Views 1172

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