Obtain a signed statement from the beneficiary preferably on an SSA-795 (Statement of Claimant or Other Person) explaining the facts. If the explanation is reasonable and they know the dollar amounts involved, accept without further development. If the beneficiary cannot give the explanation or needs help in determining the dollar amount involved, contact the employer.

Prepare a written determination in all cases when the beneficiary alleges payments for purposes of retirement and all development material supporting the determination must be annotated and forwarded to the PC for prong filing in the claims folder.

Determine whether the income is excluded or included as wages for ET purposes. The determination must explain:

1. a. 

   The facts and reason(s) for the decision;

2. b. 

   The amount of income before exclusion;

3. c. 

   The amount excluded as “retirement” payments; and

4. d. 

   The balance, if any, to be used for ET purposes.

1. a. 

   If the payment is determined to be for the purpose of “retirement,” and is covered wages, control as provided in RS 02510.020, to prevent subsequent enforcement selection.

2. b. 

   If the payment is determined to be for the purpose of “retirement” but is not covered wages, i.e., the retirement payment is excluded from FICA tax under a qualified tax exempt plan and is not reported on a W-2, do not control.

1. a. 

   If the payment is determined to be for the purpose of “retirement;” is covered wages; and the beneficiary knows the exact amount to be excluded, control as provided in
   
   RS 02510.020.

2. b. 

   If the payment is determined to be for the purpose of “retirement” but the beneficiary does not know the exact amount, the DO will:

   • •

     Diary for recontacting the beneficiary in the last month of the current TY;

   • •

     After recontact, process as provided in RS 02510.020 and forward the documentation to the PC for prong filing in the claims folder.

Handle work reports as provided in RS 02510.005 and

RS 02510.015, and special payments as provided in RS 02510.020.

1. a. 

   Award and Annual Report Notices When Special Payments Are Involved

   Include in the notice:

   • •

     The amount of total earnings for ET purposes; and

   • •

     Whether or not the amount of the payment(s) is determined to be for purposes of “retirement.”

2. b. 

   Notice When Alleged “Retirement” Payment in a Postentitlement Work Report Cannot Be Excluded

   Include a reconsideration paragraph if not otherwise provided.

EXAMPLE 1:

GENERAL MOTORS (GM) ACCELERATED ATTRITION AGREEMENT

GM employees who retire under the special accelerated attrition (retirement) agreement receive, in addition to their regular pension, a voucher worth up to $10,000 toward the purchase of a new GM vehicle and $3,000 in cash upon exercising the voucher. Both the cash payment and the value of the voucher are payments “on account of retirement” and are not counted under ET since these vouchers are i issued only upon early retirement.

EXAMPLE 2:

DOCUMENT NO. 117 - GM VOLUNTARY RETIREMENT LEAVES PROGRAM

Document No. 117 pertains to provisions in the 1990 GM/United Auto Workers Union-National Collective Bargaining Agreement that govern a voluntary retirement and standby leave program for two categories of GM hourly rated employees.

Only those provisions in this agreement that impact on the ET or reflect differences between the two categories of employees are summarized below. Ask the beneficiary which category applies.

This program is made available to eligible employees on a case-by-case basis. If not enough category I employees participate, it is made available to category II. Employees must voluntarily apply and be accepted. The choice to participate is irrevocable (with one exception).

CHARACTERISTICS OF CATEGORY I PARTICIPANTS

• •

  Employee must be eligible for regular retirement within 2 years and agree to retire the first day of the month following the month they are first eligible for regular retirement.

• •

  Employees receive 85 percent of base pay, including holidays plus cost-of-living adjustments.

• •

  There is no limitation on concurrent outside earnings and no loss of most employee benefits.

Consider these 85 percent payments to be payments “on account of retirement.” This is because participating employees perform no further services for these payments and payments are made only if the employee agrees to retire. Do not count under ET.

CHARACTERISTICS OF CATEGORY II PARTICIPANTS

• •

  Employees are not required to be within a specified time of regular retirement. There are no limitations on concurrent outside employment.

• •

  Employees must agree to being recalled to full employment any time within 24 months at any GM location in which they have seniority. Recall is discretionary with management.

• •

  Employees receive 85 percent of base pay until recalled or for 24 consecutive months, whichever is first. Vacation pay and all bonuses are not reduced.

• •

  If a layoff occurs before employee is recalled, they are subject to layoff and can sign up for unemployment compensation.

Consider these 85 percent payments to be “wages” for ET purposes even though the employee performs no direct services. These payments do not qualify as payments “on account of retirement” because there is no agreement to retire. Count payments under ET in the month for which paid. Do not post to the unposted detail portion of the MEF.

EXAMPLE 3:

UNITED STATES POSTAL SERVICE (USPS) PLAN

USPS implemented this early voluntary retirement plan for limited open “window” periods in 1992 but then extended some windows until January 3, 1993.

The plan was available to employees in specified categories who were eligible for either “Optional Voluntary Retirement” or “Early Voluntary Retirement.” Participants had to agree to retire within the window period and were paid a lump sum equal to 6 months' base pay.

Eligibility depended on various combinations of age, length of service, years of creditable civilian service, and separation from a position covered by the retirement system.

Consider this lump sum a payment “on account of retirement.” This is because employees performed no further services for this payment and the payment was made only upon agreement to retire. Do not count under ET.

EXAMPLE 4:

DEPARTMENT OF DEFENSE (DoD) PLAN

A lump sum separation payment is made to participating eligible DoD civilian employees who voluntarily elect one of the following three options: early retirement, optional retirement, or resignation. Payment is calculated according to a statutory severance pay formula but cannot exceed $25,000.

EARLY RETIREMENT AND OPTIONAL RETIREMENT

Consider the lump sum payment to those opting for “early retirement” or “optional retirement” to be a payment “on account of retirement.” This is because the employee performs no further services for this payment and the payment is contingent on retirement. Do not count under ET.

VOLUNTARY RESIGNATION

• •

  Consider the lump sum payment to be wages for ET purposes for those who voluntarily resign. If the payment is for reasons other than retirement, even under the same plan, the payment must be included in the term “wages” for ET purposes.

• •

  Count the wages as earned in the last month of employment (or prorate over the months of continuous employment preceding the resignation when benefits are affected).

• •

  Do not post this lump sum payment in voluntary resignation cases unless received subsequent to the last year of DOD employment.

Adjudicators should query the beneficiary as to which of the three payment categories apply and not verify unless questionable.

EXAMPLE 5:

SEARS - EARLY RETIREMENT INCENTIVE PROGRAM (ERIP)

This is a two-part ERIP consisting of the voluntary ERIP and the unit closing/reorganization ERIP. Benefits are the same under both parts but eligibility rules differ. Eligible employees in either part who voluntarily opt to participate receive full salary and all employee benefits (such as profit sharing, cost of life and health insurance, etc.) for 1 full year after their last date of active employment (as determined by Sears).

Consider the 1-year continuation of salary payments to be payments “on account of retirement.” This is because the employee performs no further services for these payments and the salary payments are being made only on condition that the employee accepts regular retirement at the expiration of 1 year. Do not count this salary under ET.