TN 30 (02-11)

RS 02510.016 Treatment of Special Payments (SP)

A. What is a special payment (SP)?

SP refers collectively to the dollar amounts of the following:

  • special wage payment (SWP),

  • amount excluded from self-employment income (SEI exclusion), and

  • net loss from self-employment (SE).

SPs are:

  • excluded from earnings for earnings test purposes in the year in which they are paid (or, in the case of an SEI loss, in the year it is reported),

  • subtracted from the beneficiary's total posted earnings, and

  • excluded when determining earnings for deductions purposes in the RSI Earnings Enforcement Operation (EEO).

The EEO considers earnings in the current enforcement year and the three prior years.

B. Why post special payments (SPs)?

Posting of SPs enables SSA to determine the beneficiary’s correct earnings for deduction purposes. It also prevents erroneous enforcement actions that adversely affect beneficiaries when the beneficiary:

  • receives wage payments from a nonqualified deferred compensation plan (e.g., payments under a Section 457 IRC plan of State and local government employees) or receives "payments on account of retirement" and others (for types of payments, see Income that is Not Wages for ET Purposes but May be for Coverage RS 02505.045 and Retirement Pay Beginning January 1, 1984 RS 01402.326);

  • receives a special wage payment other than those listed above (e.g., bonus or vacation pay, paid in one year that was earned in another) (for other SWPs, see RS 02505.025);

  • establishes an amount that qualifies under the self-employment income exclusion provision (for an explanation of SEI exclusions, see RS 02505.125); or

  • adjusts wages by subtracting an SE loss.

C. Where to post

Post SPs to the “detail-non-covered” section of the Master Earnings File (MEF), following instructions in RS 02510.017.

D. When to post

Adjudicators in field offices (FO) and the Program Service Centers (PSC) must post SPs when the:

  • SP applies to a beneficiary who is under full retirement age (FRA) for at least one month in the individual's tax year;

  • beneficiary is reporting the SP in an initial claim, work report, mid-year mailer, annual report, enforcement operation, or if an SWP is on an acceptable listing, submitted by an employer or the Form SSA-131 (RS 02510.021); or

  • SPs are for the current calendar year, the prior four years, or the next two years.

Guidance for when not to post a future year SP is located in RS 02510.016E in this section.

NOTE: When a beneficiary submits an SP to the FO for a tax year four or more years prior to the current enforcement year, fax the SP information into paperless to the appropriate PSC. The PSC makes any necessary adjustment in payments.

E. When not to post

Do not post SPs if:

  • received in the month the beneficiary attains FRA, or later;

  • shown or will be shown in the "nonqualified plan" box of Form W-2. (When an employer fails to show the payment on the W-2, see RS 02510.019C);

  • expected to be received in the next or following taxable year, but you determine that the facts of the case are inconclusive and make it prudent to create a diary and verify the SP before posting; or

  • expected three or more years in the future.

For SPs the beneficiary expects to receive in future years, create a diary to verify and post in the future year(s).

F. References

  • RS 02505.025 – Special Wage Payments

  • RS 02505.045 – Income That Is Not Wages for ET Purposes But May Be for Coverage

  • RS 02505.050 – Determining if Income Is NESE

  • RS 02505.060 – Treatment of Royalties

  • RS 02505.115 – Federal Agricultural Payment Programs

  • RS 02505.140 – Documentation Requirements in SEI Exclusion Cases

  • RS 02505.145 – Notice Content and Special Coding Requirements in SEI Exclusion Cases

  • RS 02505.150 – DO Processing of Annual Reports and Current Year Estimates in SEI Exclusion Cases

  • RS 02505.160 – Commissions Earned by Life Insurance Agents – General

  • RS 02505.170 – How to Treat Repeat Commissions on Casualty Insurance

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RS 02510.016 - Treatment of Special Payments (SP) - 02/09/2011
Batch run: 07/09/2013