The Social Security Administration has defined seven life-changing events that can change how an Income Related Monthly Adjustment Amount (IRMAA) is calculated. One of those life-changing events is called “Loss of Income-Producing Property.” It sounds broad and easy to use, but it is actually very specific and uncommon.

The Social Security Administration has its employee training manuals publicly available online. These guides are step-by-step instructions for employees trying to process a wide variety of situations.

The guide for “Loss of Income-Producing Property” is “HI 01120.035 Life Changing Event (LCE) – Loss of Income-Producing Property .”

You can see from the guide that this life event is for “a significant reduction of income due to a loss of income-producing property beyond the beneficiary’s, or the beneficiary’s spouse’s, control (e.g. natural disaster, arson or criminal theft).”

They go on to write:

The loss of income-producing property must not be caused by the beneficiary’s direction. The loss must be caused by circumstances beyond the beneficiary’s control. A loss due to donation, gift, sale or transfer of income-producing property is not considered a loss beyond the beneficiary’s control and does not qualify for a new initial determination using a more recent tax year. Ordinary risk of loss taken at the time of investment in income-producing property is considered at the beneficiary’s direction. Examples of circumstances beyond a beneficiary’s control are losses caused by:

• Natural disasters (such as flood, hurricane, tornado, fire, earthquake, volcano eruption)
• Disease (affecting crops, livestock or other animals)
• Arson
• Buy-out of the property by a government under Eminent Domain
• Theft (including the taking of money or property by blackmail, burglary, embezzlement, extortion, larceny, robbery, fraud, investment fraud or other criminal activity)

Examples of circumstances within the beneficiary’s control would presumably be selling the property, gifting the property, or no longer expecting an income from the property.

While it sounds like it might be a helpful Life Event at IRMAA planning, “Loss of Income-Producing Property” is actually quite uncommon.

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