Exclusion of Retirement Accounts from Consideration as a Resource

This is to confirm a conversation you had with Moira Johnston of my staff on March 5 concerning retirement accounts excluded as a resource under the Food and Nutrition Act (the Act) of 2008. 

The Act, as amended by the 2008 Farm Bill, excludes any funds in a plan, contract, or account described in the following sections of the IRS code from consideration as a resource when determining eligibility for Supplemental Nutrition Assistance Program (SNAP) benefits: sections 401(a), 403(a), 403(b), 408, 408A, 457(b), and 50l(c) 18).  In addition it excludes the value of funds in a Federal Thrift Savings Plan account as provided in section 8439 of title 5, United States Code. 

For further information regarding the types of accounts that are excluded, please see the attached chart that lists the IRS codes identified in the Act, the type of account that is described in the sections of the IRS code, and a brief description of the account. All the accounts listed in the chart are expressly excluded from consideration as a resource by the Act. 

It has come to our attention that there is some confusion about the chart that was included in a question and answer document issued by the National office on Aug. 29, 2008, concerning section 4104 of the Farm Bill, titled, Summary of Tax-Preferred Savings Vehicles Treatment for Food Stamp Purpose. This document can be found at the following website: http://www.fns.usda.gov/snap/rules/Memo/08/082908.pdf 

You indicated that some states interpreted the words "tax-preferred" in the title of the chart to mean that the state agency had to make a further determination whether the account was "tax-preferred" before it could be excluded as a resource for SNAP purposes. This is incorrect. The State must simply determine if the applicant's account is on the list of excluded accounts or not. 

The reference to "tax-preferred" in the title of the chart is simply a way to identify these accounts as receiving preferential treatment by the IRS. They have tax advantages that other types of accounts do not. The accounts listed on the attached chart are all tax­ preferred - some are tax-deferred as well - but in the end all of them are expressly excluded as a resource by statute. 

For your information, following is a link to the informational memo that the National office sent out concerning implementation of the Farm Bill: 
http://www.fns.usda.gov/snap/rules/Memo/08/070308.pdf  I have also attached a copy of section 5(g)(7) of the Act, exclusion of retirement accounts from allowable financial resources. 

Please work with your state agencies to ensure that this policy is implemented correctly.  

Director 
Program Development Division 
Supplemental Nutrition Assistance Program

Attachment

• Accounts Excluded from Consideration as a Resource by the Act