Social security and maximum earnings
 

I will be receiving social security benefits starting next month. I'm not yet full retirement age and the law allows gross earnings up to $15,720 annually without a reduction in benefits.

Are funds I withdraw from my 401(K) and traditional IRA counted towards that maximum? I realize I'll owe income tax on the withdrawals but that money isn't exactly "earned" so I'm not sure how it will be counted.

Here's what the SSA website has to say, which doesn't exactly spell out my answer unless IRAs are considered to be "investment income."

What counts as earnings
When we figure out how much to deduct from your benefits, we count only the wages you make from your job or your net earnings if you're self-employed. We include bonuses, commissions and vacation pay. We don't count pensions, annuities, investment income, interest, veterans or other government or military retirement benefits.

Thanks!

I did some research on this same subject a few years ago and the answer is no, investment income, such as IRA and 401K withdrawals do not count against the $15700 max, only actual wages earned from working, either for someone else or if you are self-employed.

B.

I appreciate the response, bandsdavis!

I'll be doing some consulting for my old company and need to be mindful of max earnings.

You are welcome! I also did some consulting and then when we moved here played in a band. Had to report both types of earnings but never went over the max. Happy New Year!

One other factor about retiring. If one retires within one year of their full retirement age, they can earned as much as they want.

If not within one year of full retirement, then bandsdavis answered your question.

Also if you continue to work Social Security will adjust your yearly check based on increased income.