• Chris Stein, CFP®

Retirement Accounts and the Earnings Test

We received an email this week with a question about how the earnings test is applied to withdrawals from retirement accounts…

“When applying the earnings test and considering the one time exclusion of annual income from earlier in the year, do investment withdrawals (401k or IRA) count toward the monthly limit? What if the withdrawal is a lump sum and/or is taken before you start drawing SS midyear?”

Withdrawals Not Included

The good news is that neither 401k, nor IRA withdrawals are included in the earnings used by Social Security for purposes of the earnings test. Only earnings from work are included. So anything that is not earnings from work is excluded in the earnings test calculation. For this reason it does not matter whether the withdrawal happens before or after you retire and start claiming Social Security.

Deferred Income

It is also worth reminding people that any deferred income that was earned prior to claiming Social Security, but was actually received after, is also excluded from the earnings test.

For more information on this topic, please use the play button below.

http://s3.amazonaws.com/HelpWithMySocialSecurity.com/HWMSS-03-21-18.mp3

Podcast: Play in new window | Download

Subscribe: Android | RSS

Jim's best friend Mosby

Mnt%20Mo_edited.png
cfplogo.png
EliteLogo2011.jpg
FPA_ProudMember.jpg
SIGN UP FOR OUR NEWSLETTER!
  • Facebook
  • Twitter

Check out the background of firms and investment professionals on FINRA’s BrokerCheck.

Jim Saulnier and Associates | 970-530-0556 | 506 East Mulberry Street, Fort Collins, Colorado 80524
© 2020 Jim Saulnier, LLC. All rights reserved.

Ed Slott Advisor recognition requires an advisor to be well versed on the rules and regulations regarding IRAs.
The advisor must attend two live training sessions and pass two written exams annually to remain in the program.

Jim Saulnier, Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC to residents of: CO, IA, IN, MA, NY, TN, TX, WI and WY. No offers may be made to or accepted from any resident outside the specific states mentioned. Jim Saulnier, Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Financial Planning services offered through Jim Saulnier and Associates, LLC., a Registered Investment Advisor. Cambridge and Jim Saulnier & Associates, LLC are not affiliated.