Rice Law Office Blog

If you need money due to financial hardships caused by total and permanent disability, you may be able to access funds by making a Penalty Free withdrawal from your retirement savings account. 

More than one in four of today’s 21 year olds can expect to be out of work for at least a year due to a disabling condition before they reach their normal retirement age. For some, the inability to work full time will be permanent. 

Workers’ compensation, short or long term disability, pensions and social security can soften the blow of losing an income to disability, but often it’s just not enough to keep up. Fortunately, there is a little known option available to people who become disabled due to a physical condition or mental illness.

Using the Disability Exception to the Early Distribution Penalty Tax for Retirement Accounts, qualifying disabled individuals can take money out of their 401(k), IRA plan, and other qualified plans, and SEP, SIMPLE IRA, and SARSEP plans before they turn 59 and 1/2 without the 10% early distribution penalty tax that normally applies. 

For many workers, their largest savings, next to a home, is their retirement account, so when things get tough, they look to this savings to help with the mounting bills. The problem is, unless they are taking advantage of the early withdrawal exception for disabled workers, taking that money can come with a steep loss. Between the taxes and 10% early withdrawal penalty folks can easily lose up to 30-40% of their savings by making an early withdrawal. Depending on your circumstances, there might be a much better way to access your savings with less loss.

If you have to withdraw money early from your retirement savings due to lost income from permanent disability, there may be a better way to do it in order to maximize your dollar value.

Under the Disability Exception, the IRS allows qualifying disabled workers to take early distributions from their retirement account without the 10% penalty. On a $100,000 withdrawal that’s a potential for $10,000 in savings that can be used to pay down a mortgage, offset living expenses or help pay for necessary medical procedures.

At the end of 2015, the 12^th Annual Survey of Prescription Drug Management in Workers’ Comp, which tracks pharmacy costs for workers’ compensation, was released. The study showed that drug costs increased more than 6 percent compared to 2014.

This increase in drug costs is thought to be due to the increased price of medication but also due to the dramatic increase in the amount of prescriptions being written, particularly for opioids. In 2012, total spending on opioids in the US was just over $8 billion, and workers’ compensation paid for about 17 percent of that total.

That figure has grown dramatically and New Hampshire has one of the highest per capita rates of opioid prescription in the country. Not surprisingly, NH has one of the highest rates of addiction in the country. Last year more than 300 people died from drug related causes in New Hampshire, with the vast majority of those deaths stemming from opioid abuse.

The opioid epidemic in New Hampshire is very much in the spotlight, and this post will be the first in a series examining prescription drug addiction, strategies for managing prescriptions, and new legal approaches to combatting addiction.

Photo courtesy of Flickr user Chris Potter under a Creative Commons Attribution 2.0 Generic License.

For 2016, there will be no cost-of-living adjustment for Social Security and SSI benefit rates. This means that the government has determined that the cost-of-living has not risen since last year, and benefits will hold steady until the review next year. 

Each year the government assesses cost-of-living around the country through a Consumer Price Index – which measures changes in the price levels of essential goods and services around the country – and then adjusts benefits accordingly. If the cost-of-living goes up, the government must increase Social Security and SSI benefits.

While everyone enjoys seeing an increase in his or her benefits, the good news is that the average cost-of-living has not risen this year. Without an adjustment to cost-of-living, retirement earnings, exempt amounts and the maximum earnings subject to social security tax will also hold steady.

Question: How do I apply for a new or replacement Social Security number card? 

Answer: You can get an original Social Security card or a replacement card if yours is lost or stolen by following the steps below. You cannot apply for a card online. There is no charge for a Social Security Card. You will need to: 

• Show the required documents, which will vary depending on citizenship and the type of card requested.
• Fill out and print an application for a Social Security Card and
• Take or mail your application and documents to your local Social Security office. 

Question: How do I change or correct my name on my Social Security number card?

Answer: If you legally change your name because of marriage, divorce, court order or any other reason, you must tell Social Security so you can get a corrected card. You cannot apply for a card online. There is no charge for a Social Security card. To get a corrected Social Security card, you will need to:

• Show the required documents. You will need proof of your identity. Sometimes you also may need to prove your current U.S. citizenship or lawful noncitizen status.
• Under the heading, “Type of Card,” select “Corrected”for a list of the documents you need;
• Fill out and print an application for a Social Security Card and
• Take or mail your application and documents to your local Social Security office

Question: How do I apply for Social Security retirement benefits?

Methods to Maximize Social Security Disability and Retirement Benefits

Part one: What is File and Suspend?

This is my first post in my series on social security disability and retirement strategies to increase monthly benefits. In my first two posts, I will try to explain the concept of file and suspend as a strategy to increase retirement benefits and in the second post, I will address the controversy surrounding this option. In my third post I will address the method of dual filing for social security disability and retirement to maximize benefits for those forced to retire early due to disability.  

File and suspend is a strategy used by married couples to increase retirement benefits. It’s easier than it sounds. Here’s how it works:

The spouse with the higher retirement benefit known as PIA (the formula for calculating benefits is called the Primary Insurance Amount or PIA) files for social security benefits at full retirement age, then immediately files a notice to suspend payment of those benefits. In many households the higher earner is the husband, so he would file for retirement at his full retirement age (as opposed to early retirement), but he would opt out of taking his actual payment.