5156-7        RETIREMENT FUNDS

Retirement funds are annuities or work-related savings plans designed to provide income when employment ends.  A retirement fund may be a pension, disability, or retirement plan administered by an employer or union.  A retirement fund may be an individual retirement accounts ( IRA Individual Retirement Account ) or a plan for a self-employed person, sometimes called a Keogh plan.

Retirement funds fall into three general categories:

• A retirement savings account that is owned and can be accessed by the individual;
   

• A pension plan established by an employer; and
   

• A deferred compensation plan.

5156-7 A.   RETIREMENT SAVINGS ACCOUNTS

The following types of retirement savings accounts are individually owned, and money may be deposited and withdrawn at will. These accounts are available, countable resources regardless of an individual's employment status:

• Individual Retirement Accounts ( IRA Individual Retirement Account s);
   

• Keogh plans; and
   

• Simplified Employer Pension Plans ( SEP Simplified Employer Pension Plan s), which are considered IRA Individual Retirement Account s by banks and the IRS Internal Revenue Service .

5156-7 B.   PENSION PLANS

Pension plans (including PERS Alaska's Public Employees Retirement System and SBS Alaska's Supplemental Benefit System ) that are established by an employer are exempt while the individual is employed with that employer. Pension plans include:

• 457 plans (plans for state and local governments and other tax-exempt organizations);
   

• 401(k) plans (generally a cash-or-deferred arrangement and generally limited to profit-making firms);
   

• Federal Employee Thrift Savings plan;
   

• Section 403(b) plans (tax-sheltered annuities available to employees of tax-exempt organizations and state and local educational organizations); and
   

• Section 501(c)(18) plans (retirement plans for union members consisting of employee contributions to certain trusts that were established before June 1959).

Availability of Pension Plan Money:

If an individual is no longer working for the employer who established the pension plan, and is not yet eligible for periodic payments from the plan, it is a countable resource if the individual has the option of withdrawing the money as a lump sum.

When the money in a pension plan cannot be immediately withdrawn and used to meet the needs of the family, the account balance is considered unavailable if:

1. The individual demonstrates that they have applied for and are pursuing access to the account balance; and
    

2. Receipt of the money cannot be expected in the month for which eligibility is being determined.

If the individual is eligible for periodic payments from a pension plan, the individual must apply for such payments under development of income requirements.  In this situation, the account balance is not a resource, but the periodic payments are counted as income.

If an individual refuses or fails to make a reasonable effort to secure this money, either as a lump sum or as periodic payments, the balance is considered available.

5156-7 C.   DEFERRED COMPENSATION PLANS

Deferred compensation plans are evaluated based on whether the individual can access the money while still employed with the employer that established the account.

If the individual can access the money while still employed, the deferred compensation plan is considered available and countable.

For other deferred compensation plans, such as the one offered by the State of Alaska, the individual may not withdraw the money while still employed. Such plans are treated as pension plans.

5156-7 D.   VALUE OF RETIREMENT FUNDS

The value of any retirement fund is the account balance minus any expected penalties or fees for withdrawal.