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Effective: December 1, 2006 |
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19.25.10ar1 - Retirement Funds (Archive) |
Archived: November 1, 2009 |
This section provides policy details for retirement funds and other pension accounts.
MinnesotaCare (MCRE), MA Method A, MA-EPD and GHO.
Retirement Funds Verification.
MinnesotaCare, MA Method A, MA-EPD and GHO
Exclude pension and retirement funds that are held in a retirement instrument. Funds the client intends to use for retirement that are not in a retirement instrument cannot be excluded. See also Excluded Assets.
There are two main types of pension and retirement funds:
l Individually owned retirement plans/instruments. These include:
n Individual Retirement Accounts (IRA).
n 457 deferred compensation plans.
n 401K plans.
n 403B plans.
l Employer-based plans, whether public or private. These include:
n Public Employees Retirement Association (PERA).
n Exclude funds for current employees if funds remain in the plan.
n Exclude funds for former employees who have funds left in the employer's plan when the employee leaves employment.
Example:
George has an IRA, a PERA account from a previous employer, and a 401K through his current employer.
Action:
All three of these funds are excluded from his asset total.
Example:
Michele has a 401K plan from a former employer, a 457 deferred compensation plan through her current employer. She also has a savings certificate that she intends to use for retirement.
Action:
Exclude the 401K and the 457 deferred compensation plan from Michele's asset total. The savings certificate cannot be excluded and must be evaluated based on the asset type.
Count the full amount of pension and retirement funds if available for:
l Individually owned funds.
For individually owned funds, such as IRAs, Keogh plans, and other individual plans, subtract the early withdrawal penalty from the amount in the plan to determine the countable value.
l Funds through an employer or union.
A retirement/pension fund held by an employer is available if the employee, whether current or former, can gain access to it. It is unavailable if access is not possible.
Note: Circumstances under which funds are available will vary but may include disability, purchase of a home, or educational needs.
Withdrawn funds are considered income in the month received, and an asset thereafter if retained.
Example:
Joe is a substitute teacher. He has a pension fund with the Teacher's Retirement Association. He cannot gain access to these funds.
Action:
Exclude the value of the pension fund from his asset total.
Example:
Fern has a deferred compensation plan through her employer. She is currently on medical leave for several months. The deferred compensation plan is available in cases of disability.
Action:
Because the retirement fund is held by an employer, determine if the deferred compensation plan is available to Fern. If it is available because her reason for medical leave meets the disability criteria, count the amount of funds that are currently available for withdrawal. Any funds that cannot be withdrawn are unavailable and are not counted toward Fern’s asset total.
Example:
Mary is a former county employee. She has $3,000 in a PERA account.
Action:
The $3000 value of the PERA account will be counted toward Mary’s asset total if the funds are available to her. Because it is a retirement fund held by a former employer, determine if Mary is able to access the funds. If Mary does access the funds the funds would be counted as income in the month it is received and as an asset if retained the following month.
Example:
Bernard has an IRA with a balance of $3,500. If he cashes it in, he will have to pay $300 as an early withdrawal penalty.
Action:
Because an IRA is an individual plan, count the $3,200 toward the asset total for Bernard. The calculation: $3,500 balance - $300 withdrawal penalty = $3,200 value.
Do not verify retirement or pension funds for MA-EPD.
For MCRE, MA, GAMC and GHO, follow policy outlined in Verification of Assets.