Early Retirement SS Benefits Reduction due to Income earned questions.

[glasswave]

Hello,

I've bee reading about the Early Retirement SS Benefits Reduction due to Income earned.

I understand that they deduct $1 from your benefit payments for every $2 you earn above the annual limit of $22,320.

How exactly do they calculate earned income?
Do your social security benefits get counted as earned income?
How about Roth conversion dollars? Are they considered earned income?

If I am earning $18k per year due to taking an early retirement incentive,
And I am supposed to receive $30k from social security benefits,
Am I over the $22320 earned income limit?

If I make a $30k Tax Deferred retirement savings conversion to Roth IRA,
Am I over the limit now?

What types of revenue actually constitutes "earned income?"

Thanks


~~~~

 

[MissMolly]

No, SS is not considered earned income.

 

[cathy63]

... How exactly do they calculate earned income?

Generally, it's income you get from working, either for someone else or for yourself.

Do your social security benefits get counted as earned income?

No.

How about Roth conversion dollars? Are they considered earned income?

No.

If I am earning $18k per year due to taking an early retirement incentive,
And I am supposed to receive $30k from social security benefits,
Am I over the $22320 earned income limit?

No.

If I make a $30k Tax Deferred retirement savings conversion to Roth IRA,
Am I over the limit now?

No.

 

[glasswave]

Generally, it's income you get from working, either for someone else or for yourself.

No.

No.

No.

No.

Thank you so much.

So I presume that only "wages, tips and other compensation," along with capital gains, interest and "profit or loss from a business" get counted toward reducing your benefit.


If one took withdrawals from "Tax Deferred retirement savings accounts" and spent the money would it count as income toward reducing your retirement benefit?

 

[marko]

Thank you so much.

So I presume that only "wages, tips and other compensation," along with capital gains, interest and "profit or loss from a business" get counted toward reducing your benefit.


If one took withdrawals from "Tax Deferred retirement savings accounts" and spent the money would it count as income toward reducing your retirement benefit?

AFAIK, only earned income, like from a paying job count. Investment income doesn't.

 

[Out-to-Lunch]

Another way I have heard it described is to consider if SS tax is levied on that income. If it is, it is (most probably) earned income, and if not, it is (most probably) NOT earned income.

 

[cathy63]

Thank you so much.

So I presume that only "wages, tips and other compensation," along with capital gains, interest and "profit or loss from a business" get counted toward reducing your benefit.


If one took withdrawals from "Tax Deferred retirement savings accounts" and spent the money would it count as income toward reducing your retirement benefit?

Wages, tips and other compensation -- YES
capital gains, interest -- NO
profit or loss from a business -- YES
withdrawals from Tax Deferred retirement savings accounts -- NO

 

[Koolau]

Yeah, I think it's anything eligible to be SS taxed.

 

[glasswave]

Thank you everyone, this has all been very helpful.