TN 67 (04-95)

SI 00830.501 Interest and Appreciation in Value of Excluded Burial Funds and Burial Space Purchase Agreements

A. Policy - Exclusion of Interest and Appreciation

1. The Exclusion

  1. Prior to 11/1/82, interest earned on an individual's burial funds (and prior to 4/1/90, interest on burial space purchase agreements) could be excluded from income only by means of the $20 general income exclusion or the irregular or infrequent income exclusion.

  2. Effective 11/1/82, section 185 of P.L. 97-248 provided that any interest earned on the value of excluded burial funds (SI 01130.409 ff) is excluded from income (and resources), if left to accumulate.

  3. Effective 4/1/90, section 8013 of P.L. 101-239 provides that interest earned on agreements representing the purchase of an excluded burial space (SI 01130.400) is excluded from income (and resources), if left to accumulate.

2. When Exclusion Applies

This income exclusion applies only if the burial fund or space purchase agreement is excluded at the time the interest is paid.

3. Interest and Appreciation Must Be Left to Accumulate

Appreciation in value and interest must be left to accumulate to be excluded from income. If not left to accumulate (e.g., paid directly to the individual, spouse, or parent), the receipt may result in countable income.

B. Policy - Related Burial Issues

1. Nonexcluded Funds

If interest is paid on a burial fund or space purchase agreement and the fund or agreement is not excluded at the time the interest is paid, the interest is treated under interest income rules. See SI 00830.500.

2. Commingled Funds

When excluded funds or spaces are commingled with nonexcluded funds or spaces, only the interest on the excluded portion is excluded. See SI 01130.410C.

3. Irregular or Infrequent Exclusion

Effective April 1, 1990, it is not necessary to apply the irregular or infrequent income exclusion to interest earned on excluded burial funds or burial space purchase agreements.

  • You must apply the irregular or infrequent exclusion to income other than that earned on excluded burial funds or burial space purchase agreements. See SI 00810.410.

  • You should apply the specific burial funds or burial space interest exclusion as discussed in this section.

C. Procedure — Development and Documentation of Interest Earned on Burial Funds

1. Consider Type of Contract

If funds and space items are held together in the same purchase agreement or contract, first determine which portions are funds and which are space items. See SI 01130.420.

2. Entire Burial Fund is Excluded

Do not document interest if entire burial fund is excluded.

3. Only a Portion of the Burial Fund is Excluded

  1. Use the following procedure to determine countable interest to be charged:

STEPACTION
1Determine total interest paid on the commingled account following development guidelines in SI 00830.500.
2Determine the ratio of the nonexcluded portion of the fund to the excluded portion by dividing the value of the nonexcluded portion of the fund by the total value of the fund. Carry the quotient to 3 decimal places.
3Multiply the decimal obtained in step 2 representing the nonexcluded portion by the total amount of interest earned on the fund. The result is the amount of interest paid on the nonexcluded portion of the fund for the period in question.

NOTE: The same ratio (in step 2) may be used every month as long as there are no deposits to or withdrawals from the total fund.

  1. Example - Computation When Only a Portion of the Burial Fund is Excluded.

    Mr. Sam Rogers filed for SSI on January 8, 1990. His assets as of January 1, 1990 included the following:

  • Savings account ($1,000 resources) ($50 interest income posted 1/1 /90)

$1,050

  • Irrevocable burial contract

$ 200

  • Nonhome real property

$ 500

  • Checking account

$ 474

 

$1,974

  • Mr. Rogers designated $500 of his savings account for burial. His available burial fund exclusion is $1,300. ($1,500 - $200 irrevocable burial contract.)

    Computation of countable interest using steps above:

    • $500 = nonexcluded portion of funds

    • Divided by $1,000 (total resources in savings account for January)

    • Percentage of nonexcluded funds = 50 percent

    • Total interest paid = $50

    • Percentage of countable interest = 50 percent×$50 = $25 countable income for January.

4. Burial Fund Exclusion No Longer Applies

If you determine that application of the burial funds exclusion ceased during a past period (SI 01130.409 ff), the interest paid on the burial funds in the months the burial funds are not excluded may result in countable income. Follow interest income development for each month that the burial funds exclusion does not apply.

D. Procedure — Interest Earned on Burial Space Purchase Agreements

1. Prior to 4/1/90

Develop interest per SI 00830.500. Interest on excluded burial space purchase agreements may result in countable income.

2. 4/1/90 and After

a. Consider Type of Contract

See C.1. above.

b. Entire Burial Space Purchase Agreement is Excluded

Do not document interest if entire burial fund is excluded.

c. Only a Portion of Burial Space Purchase Agreement is Excluded

For months beginning 4/1/90, follow the interest computation procedures explained in C.3. above when excluded and nonexcluded burial space items are held in the same purchase agreement or contract.


To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0500830501
SI 00830.501 - Interest and Appreciation in Value of Excluded Burial Funds and Burial Space Purchase Agreements - 12/07/2012
Batch run: 12/07/2012
Rev:12/07/2012