Library: Policy

317:35-5-41.7. Retirement funds

Issued 8-1-07

          The rules regarding the countable value, if any, of retirement funds are found in (1) - (2) of this subsection.

• (1) Annuities.

  • (A) Annuities purchased prior to February 1, 2005.  An annuity gives the right to receive fixed, periodic payments either for life or a term of years.  The annuity instrument itself must be examined to determine the provisions and requirements of the annuity.  For example, it is determined whether the individual can access the principal of the annuity; e.g., can it be cashed in.  If so, the annuity is treated as a revocable trust (OAC 317:35-5-41.6(a)(5)(C)(i)). If the individual cannot access the principal, the annuity is treated as an irrevocable trust.  In this instance, it must also be determined what part of the annuity can, under any circumstances, be paid to, or for the benefit of the individual.  When making such a determination, the date of application is used or, if later, the date of institutionalization (for an institutionalized individual) or the date of creation of the annuity (for a non-institutionalized individual).  Also, these dates are used in determining whether the transfer of asset provisions apply to a particular annuity.  If the annuity provides for payments to be made to the individual, those payments would be considered income to the individual.  Any portion of the principal of the annuity that could be paid to or on behalf of the individual would be treated as a resource to the individual and portions of the annuity that cannot be paid to or for the benefit of the individual are treated as transfers of assets.  Annuities may also be a transfer of assets for less than fair market value.  The worker determines, in accordance with the OKDHS life expectancy tables,  • 1  whether the member will receive fair market value from the annuity during his/her projected lifetime.  Any funds used to purchase the annuity that will not be repaid to the member during his/her projected lifetime, are a transfer of assets and the appropriate penalty period is imposed.

  • (B) Annuities purchased after January 31, 2005.

    • (i) An annuity is presumed to be an available resource to the individual who will receive the payments because the annuity can be sold.  The value of the annuity is the total of all remaining payments, discounted by the Applicable Federal Rate set by the IRS for the valuation of annuities for the month of application or review.

    • (ii) The applicant or member may rebut the presumption that the annuity can be sold by showing compelling evidence to the contrary, in which case the annuity is not considered available.  The applicant or member may also rebut the presumed annuity value by showing compelling evidence that the actual value of the annuity is less than the presumed value.

  • (C) For an individual who has purchased an annuity on or after February 8, 2006, and is applying for long-term care services, see OAC 317:35-5-41.8(c).

• (2) Other retirement investment instruments.  This paragraph relates to individual retirement accounts (IRA), Keogh plans, profit sharing plans, and work related plans in which the employee and/or employer contribute to a retirement account.

  • (A) Countability of asset.  In each case, the document governing the retirement instrument must be examined to determine the availability of the retirement benefit at the time of application.  Retirement benefits are considered countable resources if the benefits are available to the applicant and/or spouse.  Availability means that the applicant and/or spouse has an option to receive retirement benefits or is actually receiving benefits.  For example, a retirement instrument may make a fund available at the time of termination of employment, at age 65, or at some other time.  A retirement fund is not a countable resource if the applicant is currently working and must terminate employment in order to receive benefits.  An individual may have the choice of withdrawing the monies from the retirement fund in a single payment or periodic payments (i.e., monthly, quarterly, etc.).  If the individual elects to receive a periodic payment, the payments are considered as income as provided in OAC 317:35-5-42(c)(3).  If the monies are received as a lump sum, the rules at OAC 317:35-5-42(c)(3)(C)(i) apply.

  • (B) Asset valuation.  Valuation of retirement benefits is the amount of money that an individual can currently withdraw from the fund or is actually receiving.  Valuation does not include the amount of any penalty for early withdrawal.  Taxes due on the monies received by the applicant are not deducted from the valuation.

• (C) Timing of valuation.  Retirement funds are a countable resource in the month that the funds are available to the applicant.  For purposes of this subsection, the month that the funds are available means the month following the month of application for the funds.  For example, the retirement instrument makes retirement funds available at age 65.  The applicant turns 65 on January 1^st.  The applicant makes a request for the funds on February 1^st and the monies are received on June 1^st.  The retirement fund would be considered as a countable resource in the month of March.  The resource would not be counted in the month in which it is later received.

INSTRUCTIONS TO STAFF 317:35-5-41.7

         1.Refer to OKDHS Appendix M-13, Medicaid Life Expectancy Table.