Benefit Offset


DEFINITION of 'Benefit Offset'

A reduction in the amount of benefit payments received by a member of a retirement plan which may result when the member owes money to the plan.

BREAKING DOWN 'Benefit Offset'

A benefit offset is intended to adjust the retirement benefits the plan member receives, given the overdue contributions the member should have paid in the past. Essentially, the overdue contributions owed by the member are deducted from his or her retirement payments to ensure they are paid to the plan. This type of offset can also occur if the member is receiving retirement benefits from sources other than the plan. The U.S. Social Security Act provides for the withholding of up to 10% of a plan member's benefits to compensate for funds owed to the plan.

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  1. Are the distribution rules for 401(k) and 403(b) plans the same as those for IRA ...

    The distributions are different for IRAs, qualified plans and 403(b) plans. For IRAs, qualified plans (such as 401(k), money ... Read Full Answer >>
  2. Are catch-up contributions included in the 415 limit?

    Unlike regular employee deferrals, catch-up contributions are not included in the 415 limit. While there is an annual limit ... Read Full Answer >>
  3. Can catch-up contributions be matched?

    Depending on the terms of your plan, catch-up contributions you make to 401(k)s or other qualified retirement savings plans ... Read Full Answer >>
  4. Are catch-up contributions included in actual deferral percentage (ADP) testing?

    Though the Internal Revenue Service (IRS) carefully scrutinizes the contributions of highly compensated employees (HCEs) ... Read Full Answer >>
  5. Can a 401(k) be used for a house down payment?

    A 401(k) retirement plan can be tapped to raise a down payment for a house. You can either borrow money or make a withdrawal ... Read Full Answer >>
  6. How old do I have to be to make catch-up contributions?

    Most retirement plans such as 401(k), 403(b), individual retirement accounts (IRAs) and Roth IRAs allow for catch-up contributions ... Read Full Answer >>

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