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Sure he can, but it diminishes the amount of funds available for his own care. Does he have reserves left for several years? If not, then he should keep his IRA funds available for his own needs.

There's an additional issue, and that's the extra taxes he might have pay if he withdraws a substantial amount from the IRA to donate to his kids. Whether the full amount is taxable is dependent on IRS regs on the accumulation method and proportion that would be taxable.

But the bottom line is whether or not he could give the funds away and still be able to pay his own way through possibly several years of nursing home care, w/o looking to Medicaid to step up for the deficiency.
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If dad needs Medicaid to pay for care within 5 years from the date funds are gifted, he won’t be eligible for Medicaid.
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Your profile says you dad has alzheimer's / dementia. He will likely reach the point where he will need to move from regular nursing home care to a memory carer unit that is in many nursing homes. All of this is going to cost some big bucks. While he may well like to give part of an IRA to his children, his money will be better spent on his own care particularly if he ends up needing medicaid in five years.

How old is your father and what stage is his alzheimer's / dementia? Is he competent to make financial decisions at this time or is his POA dealing with his finances for him?

My dad has had alzheimer's for many years and has outlasted the time limit of his long term care insurance. He is now living from the money gained from the sale of his house. That money will provide for him for two more years. Then, he will need to cash in on his IRA to pay for his care. After that it is either veterans benefits or medicaid. He did not give anyone any money early on and his POA has rightly not given anyone any money. I think it is better to err on the side of safety in case he ever needs Medicaid.
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He can't really transfer an IRA to another person. He would have to withdraw the funds first and pay any income taxes that are due. At that point, it's no different than giving them cash. As others have already stated, any gifts will subject him to a penalty if he plans on filing for Medicaid within five years after the gift.
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