Marie, a mutual fund client, is 68 and has been receiving Old Age Security (OAS) benefits. Her net income for the year is projected to be $85,000. She asks her advisor about the potential impact on her OAS. What should the advisor tell Marie regarding her OAS benefits?

Question: Marie, a mutual fund client, is 68 and has been receiving Old Age Security (OAS) benefits. Her net income for the year is projected to be $85,000. She asks her advisor about the potential impact on her OAS. What should the advisor tell Marie regarding her OAS benefits?

Answer options:

• Her OAS benefits will be fully clawed back because her income exceeds the maximum allowed.
• Her OAS benefits will be reduced by a fixed percentage for every dollar over the income threshold. ✅ A portion of her OAS benefits will be clawed back, as her income exceeds the minimum threshold for repayment.
• Her OAS benefits will remain unaffected as she is over 65 and has contributed to the program for many years.

Correct answer: A portion of her OAS benefits will be clawed back, as her income exceeds the minimum threshold for repayment.

Explanation: OAS benefits are subject to a clawback (recovery tax) once a recipient's net income exceeds a certain threshold. For every dollar of net income above this threshold, a portion of the OAS benefits must be repaid, leading to a partial clawback.