Can I get welfare and save in a 401(k)?


Q. Can a person max out their 401(k) contributions and apply for welfare benefits for their children?
— Trying to balance

A. There are a number of programs available in the State of New Jersey that can benefit children. These include free milk and school lunches and health insurance.

All of the programs offered by the State are “means tested” on the either the applicants’ income or both income and assets, said Claudia Mott, a certified financial planner with Epona Financial Solutions in Basking Ridge.

“If you are able to contribute the maximum amount to your 401(k) which would be $18,000 for 2017 with an additional $6,000 catch up contribution for those over age 50, it is very unlikely that you are going to qualify for assistance,” Mott said.

She said the income limit for school lunch and milk programs for a family of four is just under $45,000. At this level of income, it would be hard to imagine how there would be enough extra cash in your budget to make a 401(k) contribution, she said.

Then there’s the Supplemental Nutrition Assistance Program (SNAP), which provides food stamps to families in need. Mott said to be eligible for this benefit, a family of four can earn no more than $45,500 each year and must have less than $2,500 in assets.

Then there’s Work 1st New Jersey, a program that can provide temporary cash support for a maximum of 60 months, Mott said. The program requires that applicants have no more than $2,000 in assets and income of less than $8,000 per year for a family of four, she said.

Finally, there’s the NJ Family Care program, which provides low income families with health insurance for children under the age of 18.

“For a child to qualify for this benefit, a family of four could earn no more than $7,278 per month or $87,336 annually,” she said. “While this higher income may afford the opportunity to set aside something in the way of savings, making the maximum 401(k) contribution would leave about $70,000 remaining to support the family which could prove challenging.”

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This post was first published in December 2017. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.