IRA "income" for Section 8 Federally Subsidized Housing

[Guest Jack Kapouch]

Residents in Federally Subsidized Housing pay rent equal to 30% of income. The local housing authority in CT is counting both interest on CDs held in an IRA and the required minimum distribution (person is over age 70) as "income".

I have been told there is nothing in HUD rega to give IRAs any special treeatment. Have there been any appeals to this type of ruling? This would seem to be a national problem with the popularity of 401k plans and IRAs which are treated the same way under this system.

[John Olsen]

If I understand correctly, you're saying that the Sect. 8 rules, governing certain Federally subsidized housing, include -

a. Required Minimum Distributions from IRAs, and

b. Earnings on IRA accounts

in their definition of "income", for purposes of determining rent charged (where rent = 30% of "income").

Are you suggesting that either or both ought NOT to be included?

I agree that including (B) in "income" may be unfair if the same rules do NOT include the earnings credited to a tenant's Qualified Retirement Plan, but excluding (a) from "income" would be just as unfair, if the same rules do NOT exclude income from Qualified Plans.

And that's just from a "uniformity" pespective. The question of whether ANY retirement plan assets and/or income ought to be "safe" from any requirement of utilization by an individual who is applying for public subsidy is something else again.

John L. Olsen, CLU, ChFC

Olsen Financial Group

St. Louis, MO