Any Benefits to withdraw / contribute to Spouse Roth IRA
My wife is 46 and I am 56. We both have Roth IRAs but mine is much larger as I’m currently in the process of doing annually IRA to Roth IRA conversions for myself. Are there any benefits for me to withdraw $5500 from my Roth annually and contribute to her Roth IRA to shift a bit of my Roth to her? We do have earned income and the Roths are older than 5 years. Specifically, are there benefits if I would ever need extended long term care, creditor protection, etc.
Thanks,
Ray
Permalink Submitted by Alan - IRA critic on Wed, 2017-11-22 00:00
Unless you live in one of the few states that does not fully protect IRAs from creditors, there is no creditor protection benefit to equalizing your Roths. As for LTC, unless you are not insured for LTC costs, the non institutionalized spouse can only shield a modest amount (around 100k) from Medicaid spend down. However, if the tax code is amended to delete Medical deductions, then Roth conversions will be somewhat more beneficial than under current law where if you do not have coverage, you would convert less and plan to pay LTC expenses from TIRA money. The deduction would offset most of the taxes from the IRA distribution, but if the deductions are not allowed you would probably pay a share of the costs from the Roth money to stay out of the higher brackets. But I don’t see any clear advantage in trying to equalize the Roths by taking distributions from yours.