What would you like to do?
Is 401K savings considered earned income while collecting Social Security?
No. Distributions from a 401k are unearned income for Social Security purposes, and do not affect the benefit amount you receive under regular SS retirement or SSDI (disability) programs. Only SSI (Supplemental Security Income, a form of welfare) payments are means-tested and offset by either earned or unearned income.
24 people found this useful
Was this answer useful?
Thanks for the feedback!
Unemployment is income taxable, but does not count for Social Security purposes. No, only earned income (while working) counts toward SS benefits.
No, earned income includes wages, salaries, tips, other taxable employee compensation, and net earnings from self-employment. Earned income also includes strike benefits and a…ny disability pay you report as wages.
Once you pass full retirement age, which would have been 65 for you, there is no cap on annual earnings. You can earn as much as you like without fear of reduced benefits.
Unearned income would NOT count as part of the income for the earnings test amount on your social security benefits amount. Unearned income could cause some of your SSB to bec…ome taxable income on your 1040 federal income tax return.
Only if your taking an income stream from it. A way around this would be to move the funds into a single premium whole life product and borrow from the life insurance policy. …A little loop hole for you ;)
No. The Social Security benefits would be a part of all of your other Unearned Income for the year. You are not working for the benefits that are paid to you during each year.…
If you are 62 years old in 2010, you will reach full retirement age at 66. Under 2010 SSA guidelines, people who have not yet reached full retirement age can earn only $14,160… per year without incurring a penalty. For every $2.00 over the limit, $1.00 is withheld from benefits. There is an exception for the first year of early retirement, though (in this case, age 62). In the first year, there is no limit on the amount of income you can earn prior to the month you retire. You will not be penalized for pre-retirement income. For the remainder of the year, you will receive a full benefit check for each month in which you earn $1,180 or less (one-twelfth of $14,160). If you earn more than the maximum allowed, the Social Security Administration will withhold your monthly benefit check beginning in January of the following year until the overage is completely offset.
My CPA, has advised me, that you can take funds out of your 401k/IRA without any penalty or it being counted against your income. Bottom line, it is not counted as earned inco…me.
Gambling proceeds are not considered earned income if you do not report the income a self-employment income. Professional gamblers report gambling as self-employment income in… order to deduct travel and other expenses as well as to establish retirement accounts and show the income as a part of an ongoing source of income in order to qualify for bank loans. Recreational gambling income, including lottery winnings, are not considered earned income. The distinction between earned income and ordinary income is for such issues as earned income tax credit and qualifying for social security benefits. Almost any source of money, including gambling winnings, is going to be income. The money would be called unearned income in this case. Consult the SSIC office for the publications that can give you all the details.
The Annual Earnings Test for 2011 hasn't been released yet, but budget projections indicate there may be no change from 2010. For the 2010 tax year, the answer depends on your… age and whether you're drawing Social Security benefits for retirement or disability. Retirement If you've reached full retirement age (65 for people born prior to 1943; 66 for people born between 1943 and 1954), there is no limit to how much you can earn. In the year you reach full retirement age, you can earn $37,680 annually, but for every $3.00 over the limit, $1.00 is withheld from your benefits until the month your reach full retirement age. If you are under full retirement age, you can earn $14,160 per year without incurring a penalty. For every $2.00 over the limit, $1.00 is withheld from benefits. Disability People on disability can earn up to $1,000 per month ($12,000 per year) for most disabilities, or $1,640 per month ($19,680 per year) for anyone legally blind. Earning more than these limits would be considered engaging in Substantial Gainful Activity (SGA), would trigger a continuing disability review, and likely result in an end to the person's disability status with Social Security. If a disabled person attempts to return to work, SSDI allows a nine-month, non-consecutive trial work period during which there is no income limit, and no penalty for "excessive" earnings. Any month a disabled person earns more than $720.00 is counted toward the nine-month trial work period, however.
There is no limit on the amount of money you can earn while receiving Social Security retirement benefits after you reach full retirement age. At 70, you are well clear of tha…t mark. Full retirement ages Born before 1943.............65 years Born between 1943-1954..66 years The full retirement age will gradually increase each year until it reaches 67 years for people born in 1960 or later. Early retirement and earnings If retired below full retirement age: $14,160 per year, and for every $2 over that limit, $1 is withheld from benefits. In the year you reach full retirement age (prior to your birthday): $37,680 per year, and for every $3 over the limit, $1 is withheld from benefits until the month you reach full retirement age. For more information, see Sources and Related Links, below.
Social Security only considers earned income from an employer or self-employment, up to a cap of $106,800.00, to count as income for their purposes. Typical sources of unear…ned income include: inheritancepensions (from other sources)income from investmentsincome from annuitiesIRA distributionsinterest earned401(k) distributionsproceeds from the sale of a home or other property other government paymentsetc. These sources of financial support do not affect the amount of your monthly benefit check, nor are they subject to being taxed under FICA.
In Income Taxes
According to the local SSI office any retirement plan that qualifies with IRS rule 209 (xxx) is not counted as earned income.
At age 47, the only forms of Social Security you can collect are survivors' benefits (if you are a widow or widower, or an ex-spouse raising minor children under age 16) or di…sability compensation. The two programs operate under different rules and regulations. Survivors' Benefits Earned income may affect the amount a survivor(s) can receive in benefits, but the formulas used for calculating these benefits are complex and dependent on many variables. You should discuss questions regarding survivors' benefits directly with the Social Security Administration. Disability Benefits In 2010, People on disability can earn up to $1,000 per month ($12,000 per year) for most disabilities, or $1,640 per month ($19,680 per year) if legally blind. Earning more than these limits would be considered engaging in Substantial Gainful Activity (SGA), would trigger a continuing disability review, and likely result in termination of the person's disability status with Social Security. If you decide to return to work, the SSA allows nine non-consecutive months where earned income is unlimited; however, any month a disabled person earns more than $720.00 is counted toward the nine-month trial work period. You can speak with a Social Security Representative by calling 1-800-772-1213 Monday through Friday between the hours of 7:00 am and 7:00 pm. This is an automated information line, so be prepared to jump through some hoops before you reach a live representative.
Yes social security benefits are considered to be income and when you have other sources of worldwide income it is possible for some your social security benefits to become ta…xable income at your marginal tax rate on your 1040 income tax return as long as you are still living. Yes you do know that SSB are considered to be income and when you have other sources of worldwide income it is possible for some your social security benefits to become taxable income at your marginal tax rate on your 1040 income tax return as long as you are still living.
Is any of this considered earned income if you and your wife live on social security income and a small pension benefit but no labor is performed?
No. Social Security and Pension income are not considered earned income for the purposed of the Earned Income Tax Credit. This is not to say that you will not have to file… an income tax return and possibly pay taxes. Depending on the amount of income you have and your filing status, you may or may not have to file a return.