TN 93 (06-04)

SI 00830.500 Dividends and Interest

Citations:

Social Security Act as amended in 1972, §1612(a)(2)(F) and §1612(b)(3) as amended by P.L. 108-203;

20 CFR 416.1121(c) and 416.1123(a)

A. Definitions

Dividends and interest are returns on capital investments such as stocks, bonds, or savings accounts.

NOTE: A cash gift or incentive payment to open an account (e.g., checking, savings, certificate of deposit, etc.) is considered interest.

B. Policy - Month Dividends/interest are Unearned Income

If not excluded, dividends and interest are unearned income at the earlier of the following:

  • the month they are credited to an individual's account and are available for use;

  • the month they are set aside for the individual's use; or

  • the month they are received by the individual.

NOTE: Account service fees or penalties for early withdrawal do not reduce the amount of interest or dividend income.

C. Policy – Income Treatment–Benefits Payable Beginning July 1, 2004

Section 430 of P.L. 108-203, Social Security Protection Act of 2004, provides that dividends or interest earned on resources not excluded under §1613(a) of the Social Security Act or excluded under other Federal statutes are excluded income for SSI benefits payable on or after July 1, 2004.

The following describes when dividends or interest are considered income or excluded income:

When the source of the dividend or interest is...

under

then...

a countable resource

(SI 01110.001B.2.)

the dividends or interest are excluded income.

an excluded resource

a Federal statute other than the Social Security Act (SI 01130.050)

the dividends or interest are excluded income.

an excluded resource

§1613(a) of the Social Security Act (SI 01130.050)

See the appropriate POMS section related to the resource exclusion for treatment of interest or dividends.

D. Policy - Income Treatment – Prior To July 1, 2004

The following describes when dividends or interest are considered unearned income:

When the source of dividends or interest is a...

and it...

then...

financial institution

credits income to a customer account,

the interest is income.

 

computes or compounds interest or updates its own records but does not report income to a customer account,

the interest is not income.

series E/EE U.S. savings bond

was purchased by the owner; or was a gift to the owner prior to the expiration of the minimum retention period,

the interest is not income upon receipt or upon expiration of the minimum retention period.

Rationale: When series E/EE bonds are redeemed, the interest is an increase in the value of a resource; it is not income.

 

was a gift to the owner after expiration of the minimum retention period

the bond produces income equal to the purchase price plus accrued interest through the month the individual receives it.

series H/HH U.S. savings bonds

makes a semi-annual interest payment,

the interest is income when available to the individual.

 

was a gift to the owner after expiration of the minimum retention period,

the bond produces income equal to the purchase price plus accrued interest through the month the individual receives it.

life insurance policy

pays dividends,

the dividends are not income.

life insurance policy

pays interest on dividends accumulations,

the interest is income (this is the case even when the policy is not a resource; i.e., face value is under $1,500).

promissory note or other loan agreement

pays interest; or pays principal and interest in the same payment,

the interest only is income. Rationale: the principal amount represents conversion of a resource.

E. Procedure - Verification and Documentation

When it has been determined the dividend or interest income is excluded from income counting under P.L. 108-203 beginning with benefits payable on or after July 1, 2004, it is not necessary to develop this interest income. Remove the “R” type income for any month that affects the SSI payment effective July 2004 or later if it is excluded under SI 00830.500C.” Follow the normal reopening procedures in SI 04070.010F.3.

NOTE: However, the interest or dividends may be countable resources if retained into the following month.

1. Developmental Tolerance for Redeterminations Before July 1, 2004

In redeterminations, develop countable interest income only if the total alleged value of all countable liquid resources is more than $1,250. If the total alleged value of all countable liquid resources is $1,250 or less, do not ask the individual about interest income and do not contact the financial institution. Do not modify any existing associated type “R” income entry on the record.

NOTE: If the individual voluntarily reports a change in interest income, accept the allegation and make the appropriate changes to the “R” income entry on the record based on the allegation.

2. Development for Dividends and Interest Before July 1, 2004

If you must develop dividends or interest, use the chart below to verify and document frequency and amount. Input the amount as verified.

If the payer is a...

and the owner...

then...

financial institution that pays interest

alleges countable liquid resources within the applicable statutory limit (SI 01110.003),

verify by accepting his/her statement either signed or recorded on a DROC as to:

  • type of account;

  • whether it pays interest; and if so,

  • the frequency and amount.

REMINDER: Contact with the financial institution is not necessary.

financial institution that pays interest

alleges countable liquid resources in excess of the
statutory limit,

accept the allegations as to the three points listed above and stop development. The individual is not eligible.

 

alleges joint ownership of an interest-bearing account,

see SI 00810.130.

promissory note or other loan agreement

alleges interest income,

verify amount and frequency of interest income with a check or notice issued by the source or an amortization table. If one of these is not available, see SI 00830.005 on developing unearned income.

NOTE: If interest income is excludable because it is received infrequently or irregularly, see
SI 00810.410.

 

does not know whether interest income is received or due, or does not know the amount of interest income,

  • inspect the loan agreement for the needed information; or

  • if necessary, consult an
    amortization schedule.

 

alleges countable liquid resources in excess of the
statutory limit,

accept the allegation and stop development. The individual is not eligible.

source of interest different from above

has a check or award notice from the payer,

document the file with a copy of the check or award notice.

 

does not have a check or award notice,

see SI 00830.005 on developing unearned income.

source of dividends

has a check or dividend notice from the payer,

use the check or dividend notice from the source as verification; or if necessary, see
SI 00830.005 on developing unearned income.

 

receives payment in a form other than cash (e.g., shares of stock),

determine the value as income under instructions specific to that item.

F. PROCEDURE - RESOLVING DISCREPANCIES

Use the following procedure to resolve discrepancies when an individual disagrees with the amount and/or frequency of interest or dividend payments as shown on account records or IRS interface alerts:

If the income on an account record or IRS interface alert is...

and...

then...

totally excludable

———

no resolution is necessary.

not totally
excludable

the individual has a reasonable explanation for the discrepancy

  • accept his/her allegation; and

  • document the file with his/her statement either signed or recorded on a DROC if the new allegation changes the payment amount.

 

the individual does not have a reasonable explanation for the discrepancy

see SI 02310.048B.12.