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Title 8: Medicaid Page 127 Iowa Department of Health and Human Services Employees’ Manual Chapter D: Resources Specific Non-MAGI-Related Resources Revised July 10, 2026 Retirement Funds Retirement Funds 20 CFR 416.1201, 20 CFR 416.1210, 20 CFR 416.1244; P. L. 101-508 Exclude retirement funds if the member has to quit a job to withdraw the funds. If the retirement funds are not excluded:  Count the verified net proceeds after penalties in the attribution and the eligibility process if the fund is owned by the member.  Count the verified net proceeds after penalties in the attribution process if the fund is owned by the community spouse.  Do not count retirement funds owned by the ineligible spouse in the deeming process when spouses live together. NOTE: Taxes are not an allowable expense when determining net proceeds of retirement funds. The 10% early withdrawal penalty on an individual retirement account (IRA) is an additional tax.

A member who has a choice to withdraw retirement funds as a lump sum or as an annuity must choose the annuity.

Types of retirement plans include:

 Defined benefit plan: The employer promises the employee a specific monetary benefit at a specific age, based on factors such as salary and length of service. The employee cannot draw a pension until the employee meets certain requirements, such as being a certain age or being retired.

 Defined contribution plan: The employer and employee makes specific contributions to an employee’s pension fund. The amount of the benefit depends on the amount saved and how well the employee’s fund investments perform.

Most of these plans are 401(k) plans. Typically these plans can be accessed at age 59½ without a tax penalty or earlier with a tax penalty. Other withdrawal restrictions may apply depending on the plan.