Effen Posted October 5, 2009 Posted October 5, 2009 Does anyone know if retroactive disability payments would be subject to benefit restrictions? I have a plan where the AFTAP is 65%. The plan pays an immediate disability benefit commencing when social security deems a person disabled. Sometimes social security takes years to make this determination. For example, the participant might receive a letter in 2009 stating they were disabled in 2007. In this situation the plan would retro pay disability benefits back to 2007. (disability is pure subsidy - not a retirement benefit) I know the regs say "any payment", but I was wondering if for some reason ancillary disability payments might be exempt. The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.
Andy the Actuary Posted October 5, 2009 Posted October 5, 2009 I went through this issue with a benefits attorney regarding accumulated monthly payments pertaining to a retroactive annuity start date. The conclusion was that these would be subject to the 436 restrictions. The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.
Effen Posted October 5, 2009 Author Posted October 5, 2009 OK, but since my AFTAP is greater than 60%, as long as the amount of the retro payments was less than 50% of the present value of the benefits, I can still pay it, right? The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.
Andy the Actuary Posted October 5, 2009 Posted October 5, 2009 Yup, assuming the PBGC guarantee crud is not applicable. The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.
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