Updated Retirement Account Exclusions from Resources

The memorandum that follows is intended to update earlier guidance provided to state agencies on the treatment of retirement accounts in determining the Supplemental Nutrition Assistance Program (SNAP) eligibility. This memorandum replaces the previous guidance on retirement accounts that was distributed on May 14, 2009.

The Food and Nutrition Act of 2008, as amended, (the Act) excludes many retirement accounts from consideration as a resource in determining SNAP eligibility. Specifically, section 5(g)(7)(A)(i) of 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, 408A, 457(b), and 501(c)(18). This section of the Act also excludes funds in a Federal Thrift Savings Plan, as defined by section 8439 of title 5 of the United States Code.

In response to a Presidential Memorandum, the U.S. Department of the Treasury established a new retirement savings account designed for small-dollar savers and employees who do not have access to a retirement savings plan through their employers. This retirement savings program, known as myRA, started on December 15, 2014. The Food and Nutrition Service (FNS) received questions about whether myRA accounts are excluded from resources when determining eligibility for SNAP.

A myRA account is a Roth Individual Retirement Account (IRA) and is subject to section 408A of the Internal Revenue Code. Since the Act specifically excludes accounts described in section 408A of the Internal Revenue Code as a resource for SNAP purposes, myRA accounts are excluded as resources in determining SNAP eligibility or benefits. Section 5(g)(7)(A)(ii) allows the Secretary to exclude from financial resources any retirement program or account included in any successor or similar provision that may be enacted and determined to be exempt from tax under the Internal Revenue Code of 1986.

Please see the attached table for detailed information on retirement plans excluded by the Act.

Section 5(g)(7)(B) of the Act provides the Secretary with discretion to exclude additional funds in retirement plans, contracts, or accounts. At this time, FNS is adding myRA to the list of excluded retirement accounts. FNS will provide additional notification if other retirement accounts are excluded from financial resources in the future.

As noted in the May 14, 2009 memorandum, an earlier chart included in the second 2008 Farm Bill Question and Answer document on Certification Issues (available at: http://www.fns.usda.gov/snap/questions-and-answers-certification-issues-2008-farm-bill2) included the term “tax-preferred.” Some inaccurately interpreted this term as a requirement that the state determine whether a retirement account was tax-preferred before excluding the retirement account from a household’s resources. FNS 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 excluded retirement accounts are tax-deferred or tax-preferred. The final rule implementing the related 2008 Farm Bill provision, the Supplemental Nutrition Assistance Program: Eligibility, Certification, and Employment and Training Provisions of the Food, Conservation and Energy Act of 2008, was published in the Federal Register on Jan. 6, 2017, and is effective as of March 7, 2017.

Please work with your states to ensure that SNAP staff is aware of 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 included in the table, the account is excluded as a resource in determining a household’s eligibility.

Lizbeth Silbermann
Director
Program Development Division