Advisor Insight

Committed a crime? You can kiss Social Security good-bye

Ted Sarenski, president and CEO of Blue Ocean Strategic Capital, and CNBC Money Editor Jim Pavia

Social Security 'criminal's corner'

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Social Security is much more than deciding if you should begin claiming benefits at age 62 or take it at 70, when you reach full retirement age. The Social Security laws include myriad rules and regulations governing everything from death, disability, and marriage and divorce to children and stepchildren and other pension benefits, according to Ted Sarenski, president and CEO of Blue Ocean Strategic Capital. Buried within the thousands of pages of Social Security documents are a few quirky provisions that Sarenski said he likes to call the "criminal's corner."

"Social Security benefits are the backbone of most people's retirement plan," he said. "Stay away from serious trouble with the law if you want to retain your earned benefits." That said, we turn to Sarenski to take us through some of those strange Social Security "criminal" regulations that often bar Americans convicted of serious crimes from accessing benefits. 


A kill fee

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If you are charged with the felonious and intentional homicide of someone, you are not entitled to any survivor benefits, based on the deceased worker's Social Security record. For example, if you kill your spouse, you cannot receive survivor Social Security benefits on his or her earnings record, Sarenski explained. Also, if that weren't enough of a punishment, you cannot receive the onetime lump-sum death benefit of $255, either, he added.

Honor thy father and mother

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If a minor child (or children) is charged with the felonious and intentional homicide of a parent, he or she cannot receive Social Security survivor death benefits.

"I do not believe this is being taught in any schools across the country," Sarenski said. "Nor did I know that spouse or parent homicide was such a problem that the Social Security administration needed to add such a rule."


A terror tax?

Guantanamo Bay detainees
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Numerous terror-related activities have been in the news over the past 15 years — and this has not escaped the notice of the Social Security administration.

"A homegrown terrorist who has earnings in which he or she paid into the Social Security system will lose any current or future Social Security benefits if convicted of subversive activities," Sarenski said. Additionally, he said, if this person was hurt while performing the felony he or she was convicted of and is now disabled, the person cannot collect Social Security disability.

 

No back pay for crooks

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When you apply for Social Security benefits and the government determines you are due prior benefits, you will be paid up to six months in arrears as a lump sum at the same time your monthly benefit begins. That said, there was a Social Security law passed December 16, 2009, named the Prisoners Act of 2009. That rule prohibits retroactive payments to individuals during periods for which such individuals are prisoners, on probation, are parole violators or fugitive felons. 

Second chances

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The Social Security benefit of the prisoner, probation or parole violator or fugitive felon will be reinstated once the offender is off one of the aforementioned lists. 

"If you were a fugitive felon, would your Social Security benefit be the first thing on your mind?" asked Sarenski. "And even if it was, what address are you going to have them send the check to? After all, you are a fugitive."

No collective guilt

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The Prisoners Act of 2009 does not affect any spousal or children's benefits that are being collected from the earnings record of the incarcerated person or "on-the-lam individual," Sarenski said.