CFP Posted June 7, 2024 Posted June 7, 2024 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.
CuseFan Posted June 7, 2024 Posted June 7, 2024 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
Popular Post Peter Gulia Posted June 8, 2024 Popular Post Posted June 8, 2024 An employer or a plan's administrator might prefer not to provide guidance on this question. Unless one has extraordinary expertise, an answer in either direction has a potential to harm one or more of an individual’s interests. Beyond knowing the law, an adviser would need to know everything about the individual’s other and surrounding circumstances. Under the part 416 rules of the Supplemental Security Income for the Aged, Blind, and Disabled program, the subpart L rules on “Resources and Exclusions” are at 20 C.F.R. §§ 416.1201 to 416.1266. These rules begin at 20 C.F.R. § 416.1201(a) https://www.ecfr.gov/current/title-20/part-416/section-416.1201#p-416.1201(a). Those rules are only a few of many that could relate to the SSI beneficiary’s situation. And one would research too the rulings and other nonrule guidance. And the guidance the Social Security Administration provides for SSA’s employees. For example: https://secure.ssa.gov/apps10/poms.nsf/lnx/0501120210. One also might consider that some SSI provisions might allow SSA to not count some elements of a beneficiary’s income or resources. In my experience, it’s impractical to advise an SSI beneficiary unless one volunteers an uncompensated engagement and can afford to put in substantial time and attention. This is not advice to anyone. David Schultz, acm_acm, Luke Bailey and 2 others 5 Peter Gulia PC Fiduciary Guidance Counsel Philadelphia, Pennsylvania 215-732-1552 Peter@FiduciaryGuidanceCounsel.com
QDROphile Posted June 8, 2024 Posted June 8, 2024 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. Luke Bailey and CuseFan 2
FPGuy Posted June 11, 2024 Posted June 11, 2024 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. Luke Bailey 1
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