Depending on the program, IRA withdrawals can affect Social Security disability benefits. Because many people with disabilities rely on government assistance, it is important to understand how the rules regarding IRAs and distributions impact benefits.
If you own an IRA or receive distributions from an IRA, below is information you should know about how withdrawals can affect Social Security's two different disability programs:
Social Security Disability Insurance (SSDI) – This program provides recipients with benefits who have long-term disabilities who cannot work and have earned enough work credits.
Because SSDI is not means-based, recipients can receive disability benefits regardless of non-work income sources like IRAs or investments.
If recipients own IRAs, they can take distributions without impacting the amount they receive from SSDI. Recipients must have worked for a certain length of time to be eligible for disability benefits as well as be unable to earn income over a specific, low amount.
Supplemental Security Income (SSI) – This Social Security Administration (SSA) program is needs based, which means that it was created for low-income people with little to no resources who do not have enough work credits. Non-countable assets like a burial plot, car or home are not included as countable income, but owning and/or receiving IRA distributions could be viewed as a financial resource by the SSA.
Even if an IRA is not treated as a financial resource, the income from it could be. These distributions, even if the IRA was inherited, could stop or limit your disability benefits. Therefore, the SSA may require you to spend your IRA funds before becoming eligible to get SSI benefits.
If you have questions about filing a disability claim, contact the law offices of Dayes Law Firm PC to speak with a skilled Phoenix, AZ disability attorney today.