Dear Kim,
My family is going through what I consider to be our hardest time we’ve faced together so far. The doctors confirmed with us last week that my husband has early-onset Alzheimer’s. We’re supposed to tell our kids this weekend. The youngest is just about to graduate college.
Once the initial shock of the diagnosis wore off, my type-A personality set in and I researched online for hours what people in our shoes do. I just feel helpless at the moment, and this at least feels like I’m doing something.
A lot of what I found talked about just preparing for the future and getting things sorted out, as well as finding a possible long-term care facility for when things begin to get really bad.
I’ve looked into “shopping” around for a facility in our area, but the prices are exorbitant and the waiting lists are years out. I can hold out on the waiting period for a time, but I want to be ready financially when he has a spot available in a few years. Ideally, I would like to take care of it with our finances alone, though I know our children will want to help where they can.
My husband and I both opened Roth IRAs when they began in 1998 which we’ve maxed out every year, so that is where our greatest savings lie, but we’re only 52. Is there a way that we can access that money early?
Sincerely,
Researching Roth IRAs
Dear Researching,
There are questions I would like to ask to further understand your situation, but generally, the following information may help you:
Roth withdrawals aren’t as restrictive as they are for traditional IRAs, but they still have rules. The contributions you put into your accounts are always available to you since you have already paid taxes on them, but the earnings have a 5-year rule, meaning you have to have the account open for 5 years before withdrawals are allowed.
Additionally, if you were to pull from the account before you were 59 ½ years old, there could be a 10% tax penalty on those earning withdrawals.
However, IRS publication 502 states, “You can include in medical expenses amounts paid for qualified long-term care services and premiums paid for qualified long-term care insurance contracts.”
502 goes on to define both qualified long-term care services and qualified long-term care contracts. This allows you to withdraw from your IRAs without a penalty if the cost exceeds 7.5% of your income.
Of course, you should check with your CPA to verify this information and ensure your situation fits these exceptions.
I recommend sitting down with a financial advisor to explore other options for you and to make sure you are making the best decisions you can.
There are also many caregiver support groups, and I recommend you find one to get information and support. The burden of caring for a family member with dementia is great, and it will take a toll on your physical and mental well-being. Let family members and friends step in and help you by giving you time away to care for yourself. It will help you be able to provide the care your husband will need in the coming years.
I wish you the best as you navigate this new normal in your and your husband’s lives.
Sincerely,
Kim
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