Change the Social Services Law to Protect the Retirement Accounts and Vehicles of Aging Low Income New Yorkers
A. Retirement Accounts
Antone Lupica is 62 years old and lives in upstate New York. He worked for decades as a mason, carpenter, landscaper, and plumber.  He raised two children and was able to put away some savings in an IRA for his retirement years. About ten years ago, his physical labor led to a severe back injury and surgeries which rendered him unable to work. To support himself, he applied for Social Security Disability Insurance, which took over two years to come through. During that time, he applied for public assistance to support himself because he had no other income.
He was denied public assistance because of his retirement account, an IRA, and was forced to liquidate it to support himself while he waited for his Social Security application to be processed. IRS rules impose a 10% penalty when IRAs are liquidated before the owner turns 59 1/2, and after the payment of that penalty and the taxes, he lived on his IRA until he spent it down, and he was then eligible for public assistance.
Mr. Lupica was awarded Social Security Disability benefits and now lives on $961 dollars a month. He has no other income. Even with SNAP (food stamps) and HEAP benefits, his Social Security is not enough to allow him to repair his car, pay for heat and maintain his appliances. His thermostat is set at 46 degrees Fahrenheit and he does not believe that his car will pass inspection. If he had been allowed to keep his IRA, he would now have supplemental income and would likely have enough income to heat his home and deal with other emergencies.
Saving for retirement is a critical safeguard against poverty in old age, and IRAs are recognized as a critical tool in planning for quality of life in one’s later years. Yet the resource limit for public assistance eligibility is $2,000 for a person under 60 and $3,000 for a person 60 or older. Ownership of a retirement account worth more than these amounts will disqualify a person from receiving public assistance.
This policy undermines current thinking on the importance of savings and assets. For example, the United States Treasury created the myRA program, which is specifically designed to encourage people with no employer-sponsored retirement savings plans to start saving even small amounts for retirement.  In light of such national awareness regarding the importance of retirement savings, forcing people to liquidate their IRAs to receive assistance is a glaring flaw in the Social Services Law’s mission to make public assistance a temporary service. As Mr. Lupica’s story illustrates, whittling down one’s resources to nothing in order to receive aid creates a spiral of multiplying poverty, especially as necessary items such as boilers and cars inevitably age and break. Requiring the liquidation of retirement accounts as a condition of eligibility for public assistance undermines the financial security of our elders and conflicts with the nation’s interest in encouraging people to create their own retirement funds.
One applicant for public assistance, age 53, had only one available resource: an IRA valued at $12,070.  When he applied for Public Assistance and SNAP benefits, he was denied, since the value of the IRA put him over the $2,000 resource limit. By the time the fair hearing took place, he had liquidated his savings and spent them down to the point that “he no longer ha[d] available resources to meet his financial needs.”  The denial of assistance was upheld, however, since at the time of application his IRA put him over the limit.  Other fair hearing decisions affirm that situations like these are not isolated incidents. People with limited resources, except for their IRAs, are denied benefits and forced to liquidate their savings in order to receive the help they need to get by. 
For many people, an IRA is the only retirement plan they have. Under the current rule, a working person who loses his or her job and turns to public assistance for support will be required to withdraw those retirement savings, and then spend them down to at or below $2,000 as a condition of eligibility for public assistance.  If a withdrawal is made before the person reaches the age of 59 ½, the person will incur a 10% penalty of the value of the IRA  unless the withdrawal is used for the purchase of a home, college tuition or certain medical or health expenses. 
RECOMMENDATION: AMEND THE SOCIAL SERVICES LAW TO EXEMPT RETIREMENT ACCOUNTS FROM THE ASSET LIMIT TESTS FOR PUBLIC ASSISTANCE.
The automobile resource rule in New York permits a family to own one car per household, valued at up to $4,650. If that car is used for work purposes, then the permissible value is $9,300.  If a family’s vehicle exceeds the resource limit, their options are to sell the car or to downgrade the car for one of a lower value. A person who is close to social security retirement age or who has a pending application for Social Security Disability may need to apply for public assistance until the Social Security benefits are approved or until they become eligible. It makes no sense to require a person to sacrifice or significantly downgrade a vehicle in order to qualify for public benefits. They should be allowed to retain a reliable car as they move into their golden years.
RECOMMENDATION: AMEND THE SOCIAL SERVICES LAW TO EXEMPT ONE CAR OF ANY VALUE FROM THE ASSET LIMIT TESTS FOR PUBLIC ASSISTANCE.
 Letter from Antone Lupica to Assemblyman William Magee, January 28, 2015, on file with Empire Justice Center.
 Started in 2014, these accounts can be maintained until they reach $15,000, or for 30 years at a lower balance, at
which point they must be rolled over into a private-sector Roth IRA. myRA.treasury.gov, my Retirement Account, About, https://myra.treasury.gov/about/.
 FH# 6117833Y, Nassau County, August 6, 2012.
 E.g., FH#6257067K, New York City, June 12, 2013 (Applicant was denied public assistance because of the value of
a $41,915.39 IRA; the applicant would otherwise have qualified.); FH#6210952H, Nassau County, December 6,
2012 (Applicant denied public assistance based on a checking account with $1,200 and an IRA of $6,191. Were the IRA disregarded, the applicant would have qualified.); FH#6480154R, Dutchess County, November 7, 2013 (Applicant denied public assistance based on $2,292.05 IRA; applicant would otherwise have qualified.); FH#5753308H, New York City, June 28, 2011 (Applicant, age 57, was denied public assistance because of an IRA in the amount of $17,748; applicant would otherwise have qualified.).
 18 NYCRR § 387.9(b)(1)(i); 7 CFR § 273.8(c)(1).
 26 U.S.C. § 72(t)(1), (2)(A)(i).
 26 U.S.C. § 72(t)(2)(B), (D)-(F).
 If the individual has no other resources, the car’s fair market value above these amounts can be applied toward
the $2,000 or $3000 resource limit a recipient may have and still qualify for benefits.
For more information, please contact:
Susan C. Antos
Empire Justice Center
119 Washington Avenue