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Posted

Long term permanently disabled since childhood, on SSI, full time worker for client company.  We just installed a new 401k plan at the company.  Should the disabled employee participate?  Our fear is that participation could end up costing the employee on his SSI benefits.  That would be a bad deal for the employee, even with a very generous match.   But I can't find anything saying that for sure.  Anyone ever deal with this before?  Thanks.

Posted

Are you concerned about their participation or subsequent distributions impacting SSI benefits?

I do not think that retirement plan distributions impact SSI.

I'm not sure about active participation/contributing to a 401k plan. On one hand, why would someone deferring some of their pay reduce their SSI? The flip side of the argument is if they can afford to contribute and do without that portion of their pay, why is SSI "subsidizing" that with what could be considered higher than necessary payments? Sorry, but I don't know that answer, nor if it is more a Federal or specific state concern.

 

Kenneth M. Prell, CEBS, ERPA

Vice President, BPAS Actuarial & Pension Services

kprell@bpas.com

Posted

I would like to underscore Peter Gulia's comments. Employers and plan fiduciaries* should not be giving any advice about the law that is not specifically required by applicable law. For example, a plan is required to provide an explanation of rollover rules. A plan should not go beyond the mandate even with respect to related aspects of the rollovers, and certainly not with respect to other tax matters. 

*Unless the fiduciary is professional and engaged expressly to provide the advice. Even then, the appointing fiduciary would have to be prudent in the engagement, including determining if the fiduciary were competent to provide the service/advice.

Posted

Have personal experience (family member) with SSDI. Monthly income limits based on wages (exclusive of sick pay, paid time off, bonuses and perhaps other categories as well). Contribution to a 401(k) not reducing wages has no bearing. It is my understanding (not experience) that retirement plan distribution are considered unearned and if so would not count. But again, that's SSDI. SSI's definition of income much broader: “...any item an individual receives in cash or in-kind that can be used to meet his or her need for food or shelter {with some limited exceptions}.” Don't think contributions to a 401(k) affect SSI but pensions (presumably QP distributions) do. Having said that, can only agree with other commentators that subject individual should seek guidance from SS. Maybe employer can help by suggesting questions for him/her to ask.

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