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Guide for Completing Form 8823 - page 48 / 197

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48 / 197

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Any retirement benefits received as periodic payments are included in annual income.

Annuities

If a member of the household is receiving annuity payments and is not able to withdraw the balance as a lump sum of cash, the payments are treated as income and no calculation of income from an asset is made. If the balance of the annuity can be withdrawn, the annuity is treated as an asset. In addition to the income earned from the annuity, the cash value of the annuity must also be determined.

The cash value is the full value of the annuity, minus any surrender (or withdrawal) penalty, minus any taxes and tax penalties that would be due, and is the value used to compute the imputed income of the household’s assets. The actual income is the balance in the annuity multiplied by the percentage at which the annuity is expected to grow over the coming year.*

Trusts

  • 1.

    *If any member of the household has the right to withdraw the funds in the account, the trust is considered an asset and treated as any other asset. The cash value of the trust is added to total net assets. The actual income received is added to actual income from assets.

  • 2.

    If only the income, but none of the principal, is currently available to a member of the household, the income is counted in annual income, but the trust in not included in the calculation of income from assets.

3.

If no member of the household has access to either the principal or income of a trust, the trust is not included in the calculation of income from assets or in annual income.

4.

If a member of the household receives a portion of the trust’s principal on a regular basis, the payments are included in annual income. 30

If a member of the household creates a nonrevocable trust for the benefit of another person while residing assisted housing, the trust is considered an asset disposed of for less than fair market value.

  • 1.

    If the trust’s income is regularly reinvested in the trust, the value of the trust is calculated as any other asset disposed of for less than the fair market value for two years and not taken into consideration thereafter.

  • 2.

    If the household member continues to receive income from the trust, the income is added to annual income and the trust is counted as an asset disposed of for less than the fair market value for two years. Thereafter, only the actual income distributed from the trust in included in income.*

Documentation

Benefit letters or annual statements prepared by third parties are sufficient documentation. Verification may also include bank statements noting the transfers of funds.

*See HUD Manual 4350.3, Chapter 5, section 5-6(G)(1)(b)(5).*

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Revised October 2009

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