This is one of the most common questions we see — and the answer surprises almost everyone: yes, you can have a retirement account and still receive Medi-Cal. In fact, for many families, opening the right kind of retirement account is what keeps them on Medi-Cal when their income starts to rise.
Why most people think the answer is no
The confusion usually comes from mixing up two different things: assets and income. Some older Medi-Cal rules used to count assets — savings accounts, investments — against you. But MAGI-based Medi-Cal (which covers most adults and families) only looks at your income. Your retirement account balance is not counted as an asset for MAGI Medi-Cal eligibility. It doesn't matter if you have $500 or $50,000 in an IRA — Medi-Cal only cares about your income.
Medi-Cal (MAGI-based) looks at income — not savings
For most working-age adults, Medi-Cal eligibility is based entirely on your Modified Adjusted Gross Income (MAGI). Your retirement account balance is ignored. Only the income you receive counts — and contributions to a Traditional IRA actually reduce the income that's counted.
How a retirement account can help you keep Medi-Cal
Here's the part that turns this from "you can have both" into "you should definitely do this": contributing to a Traditional IRA reduces your MAGI dollar-for-dollar. If your income is near or above the Medi-Cal threshold, a retirement contribution can bring it back under the line.
Example: Your household's Medi-Cal limit is $36,777/year. Your income is $39,000. You contribute $3,000 to a Traditional IRA. Your MAGI drops to $36,000. Medi-Cal: still yours — plus you now have $3,000 growing in an investment account. (For 2026, you can contribute up to $7,500 to a Traditional IRA, giving you even more room to work with if you need it.)
Only Traditional IRA contributions reduce your MAGI
A Roth IRA contribution does not reduce your MAGI. If protecting Medi-Cal eligibility is your goal, always contribute to a Traditional IRA. See our Roth vs. Traditional article for the full explanation.
What about SSI?
This article covers MAGI-based Medi-Cal — the type that covers most working-age adults and families. SSI (Supplemental Security Income) has different rules and does count certain assets. If you receive SSI, speak with your caseworker before opening any new accounts.
What if you have a 401(k) through your employer?
If you’re fortunate enough to work for an employer that offers a 401(k), the same MAGI logic applies — traditional (pre-tax) 401(k) contributions reduce your MAGI dollar-for-dollar, just like a Traditional IRA. And if your employer offers a match, that’s genuinely free money on top of the MAGI benefit: your contribution goes in pre-tax, lowers your MAGI, and your employer adds more on top of it.
Contribute at least enough to get the full match — always
If your employer matches 50% of contributions up to 6% of your salary, that’s a 50% instant return on that portion of your money before a single day of market growth. No investment consistently beats that. If you have access to a 401(k) with a match and you’re not contributing enough to capture the full match, that’s the first thing to fix — before worrying about IRAs, SEP-IRAs, or anything else.
Most employers match 3% to 6% of your salary
Average 401(k) employer matches in 2026 fall between roughly 4% and 6% of salary, with the most common formula being 50 cents on the dollar for the first 6% you contribute. That means if you earn $50,000 and contribute 6% ($3,000), your employer adds roughly $1,500 — money you don't get if you contribute less than that threshold. That match money is yours on top of your own contribution, and it compounds in the market the same way the rest of your account does. If you don't know your plan's exact match formula, ask HR or check your plan documents — it's usually one sentence, and it tells you exactly how much you'd be leaving on the table.
See exactly how much to contribute
Use the calculator to see your Medi-Cal threshold and how much of a Traditional IRA contribution keeps you under it.
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