Recently in Texas, I worked with an elder law attorney who had a Medicaid case involving a community spouse who had a very large IRA account. With the IRA account being unprotected - a countable resource, and subject to a Medicaid spend-down, I instructed the community spouse to purchase an IRA Medicaid Compliant Annuity ("MCA") with an annual pay-out, rather than a monthly pay-out. In Texas, an MCA with annual pay-out is an acceptable annuitization.
When the community spouse received his first annual payment from the IRA MCA, I instructed him to immediately roll the entire payment back into a traditional IRA account. The advantages of the plan were that he qualified his wife for Texas Medicaid benefits, and he avoided having to pay income taxes on the entire payment amount.
Note: With the way the plan was orchestrated, it met the 60 day roll-over rule requirement, as well as the one roll-over per year rule. Additionally, by the end of the year, he was able to meet his required minimum distribution amount.
