Ask Larry

I am a retired federal employee on disability retirement. My family sold a farm and I had a large capital gain ( over $400,000) for the portion of my share that wasn't part of a 1031 Starker exchange. My retirement was cut by $300 a month due to this Capital Gain. Were OPM and Social Security correct when they reduced my benefits? If Yes, how long can my benefits be reduced? If No, how do I get my benefits back?

Hi,

I'm not an expert on federal employee pensions, so I don't know what if any effect your capital gains might have on your federal pension. However, I can tell you that capital gains would have no effect on any Social Security benefits for which you're eligible.

If your Social Security benefits have been reduced the only reason I can think of would be that the capital gains you received caused your Part B Medicare premium rate to increase (https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2016-Press-releases-items/2016-11-10-2.html). If that's the cause then the higher premium rate would likely only continue for the current year. If that's not involved then I wouldn't know why your Social Security benefits may have been reduced. You should probably check with Social Security to see if they have an explanation for you.

Best, Jerry