CLARIFICATION: Periodic Payments from Retirement Accounts Is Income

In the November 2013 issue, errors needing clarification appeared in the article "12 Common Items You Shouldn't Include in Household Income," under "Item #7: Some Periodic Payments from Retirement Accounts." Change 2 of the HUD Handbook removed the idea that periodic payments from an asset is not income until the amount invested is recouped.

Now, if regular payments are made from retirement accounts, the payments are considered income. With Change 4, HUD recently revised some language in HUD Handbook 4350.3 to clarify how managers should treat retirement accounts further. Balances held in IRA, Keogh, and similar retirement savings accounts are counted as assets, even though withdrawal would result in a penalty, unless benefits are being received through periodic payments [HUD Handbook 4350.3, par. 5-7 (G)(4)(b)].

In other words, if retirement benefits are received through periodic payments, you would include this in annual income and you do not count any remaining amounts in the account as an asset [HUD Handbook 4350.3, par. 5-7 (G)(4)(d)]. The revised article incorporating these clarifications can be found here.