Clarification on Exclusion of Retirement Accounts from Resources

Recently we became aware that confusion remains regarding which retirement accounts are excluded from resources when determining eligibility for the Supplemental Nutrition Assistance Program (SNAP). The Food and Nutrition Act of 2008 (the Act) excluded most retirement accounts from consideration as resources.

Specifically, the Act excludes any funds in a plan, contract, or account described in the following sections of the Internal Revenue Code of 1986: 401(a), 403(a), 403(b), 408, 4084, 457(b), and 501(c)(18). The Act also excludes funds in a Federal Thrift Savings Plan, as defined by section 8439 of title 5 of the United States Code. For more detailed information on which plans the Act excludes, please see the attached table.

The Act also provides the Agency with discretion to exclude additional funds in retirement plans, contracts, or accounts. At this time we have not identified any additional funds to be excluded. If we do so in the future. we will notify you.

We were also informed that there was some confusion concerning the chart included in the second 2008 Farm Bill Question and Answer document on Certification Issues (the document can be found at: http://www.fns.usda.gov/snap/rules/Memo/2008/082908.pdf. The table included the term "tax-preferred." Some believed that the use of this term required the state to determine whether a retirement account was tax-preferred before the state could exclude that retirement account from a household's resources. We used "tax-preferred" to indicate that these accounts receive preferential treatment by the Internal Revenue Service (i.e., these accounts have tax advantages). There is no need to differentiate whether these accounts are tax-deferred or tax-preferred.

Please work with your states to ensure that they know which retirement accounts the Act expressly excludes from resources and are applying the policy accurately. States only need to determine whether the retirement account is defined by the above mentioned sections (i.e., is included in the attached table). If the retirement account is on the table, the account is excluded as a resource in determining a household's eligibility.

Arthur T. Foley
Director
Program Development Division

Attachment

• Retirement Accounts Excluded from Resources by the Act