Does OPERS pension lump sum count as earned income for Social Security earnings limit?
I'm completely stressed trying to figure out if this sudden pension payout will mess up my Social Security benefits! I've been receiving early retirement benefits since turning 62 (I'm 65 now and my Full Retirement Age hits next month on 10/15/25). I've been super careful working my part-time job at a local government agency, making sure I stay under the $31,680 annual earnings limit. But here's what happened - my department unexpectedly got eliminated, and last week I received a $10,500 direct deposit (about $7,800 after taxes) from my OPERS (Ohio Public Employees Retirement System) pension account as a lump sum payout. This wasn't something I requested or expected! Will Social Security count this as earned income for the earnings test? I'm terrified they'll say I exceeded the limit and demand repayment of benefits. The timing is especially awful since my FRA is just weeks away when the earnings limit disappears completely. Has anyone dealt with pension payouts and the earnings limit?
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Samantha Johnson
SSA won't count that as earned income for the earnings test! I went through something similar with my state pension last year. The earnings test ONLY looks at wages or self-employment income. Pensions, 401ks, investment income, etc don't count toward the limit. You're fine! Just keep documentation of what the payment was in case they ever question it.
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Santiago Martinez
•Oh thank you!! I've been losing sleep over this. So even though it's from a government job, it still doesn't count? That's such a relief if true.
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Nick Kravitz
u sure about that? my nefew had his benefits cut when he got a lump sum from his old job. SSA is confusing as hell and everytime u talk to them u get diffrent answers!!
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Hannah White
•There's an important distinction here. If the lump sum was for WAGES (like back pay, accumulated vacation/sick leave, or severance), then yes, it counts toward the earnings test in the year received. But if it's truly a pension distribution or retirement account, it doesn't count as "earnings" for the annual limit.
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Michael Green
I can provide some clarity on this. For Social Security's earnings test, only wages and net earnings from self-employment count toward the limit. Your OPERS lump sum distribution is considered a pension payment, not wages. However, there's another consideration: if you worked for an employer where you didn't pay Social Security taxes (like many state and local government positions covered by OPERS), you may be subject to the Windfall Elimination Provision (WEP) or Government Pension Offset (GPO). This doesn't affect the earnings test but could impact your benefit calculation. The good news is you only have about a month until you reach Full Retirement Age, at which point the earnings test no longer applies to you at all!
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Mateo Silva
•This is 100% right! I worked for 20+ years in non-covered employment (teacher) and learned ALL about WEP and GPO the hard way. But those provisions are totally separate from the earnings test - they reduce your benefit amount based on the pension itself, not based on when you receive it or the form it comes in. OP, if you've been receiving SS for years, WEP has likely already been applied to your benefit calculation.
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Victoria Jones
i had something kinda similar happen but with severance pay and they DID count that against me. had to pay back like $2700 in benefits!! make sure u talk to actual SSA not just internet advice
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Santiago Martinez
•That's terrifying! Though I think severance is different from a pension payout? But you're right that I need to confirm with SSA directly. I've been trying to call them for 3 days but can't get through.
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Cameron Black
I tried calling SSA about a similar issue last month and spent 2 hours on hold before getting disconnected! TWICE! Then I found this service called Claimyr that got me through to a real person at SSA in about 15 minutes. Totally worth it. Their site is claimyr.com and they have a video showing how it works: https://youtu.be/Z-BRbJw3puU Regarding your actual question - pension payments don't count toward earnings limit, but definitely verify with SSA since your situation involves a government pension which sometimes has special rules.
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Santiago Martinez
•Thank you for the tip! I'll check out that service - at this point I just need a definitive answer from SSA directly. The stress of not knowing is killing me.
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Hannah White
Important distinction that I haven't seen mentioned yet: The timing of when you EARNED the money matters, not when you received it. If this pension payout represents deferred compensation for work you did BEFORE claiming Social Security at 62, then it shouldn't count toward your earnings limit even if it was technically considered wages. Here's the exact language from SSA's POMS: "Payments received after the initial month of entitlement to benefits that are not attributable to services performed after the initial month of entitlement do not affect benefits."
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Santiago Martinez
•That's fascinating and would definitely apply in my case! The OPERS account was from work I did years before claiming SS. So it sounds like even if it was somehow classified as wages (which I don't think it is), the timing would exempt it? I need to bring this up when I talk to SSA.
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Samantha Johnson
YOU'RE WORRYING FOR NOTHING! Just ONE MORE MONTH and you hit FRA and then you can earn UNLIMITED income without affecting your benefits! Even if by some weird technicality they counted this (which they WON'T), you'd only have a small reduction for ONE MONTH. Not worth stressing about!!!
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Santiago Martinez
•You make a really good point about it only affecting one month worst case. That does make me feel better! Though with my luck, that one month would be the month I get this huge pension payout that pushes me way over, lol. But I'm feeling much more hopeful now after all these responses.
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Michael Green
If you want to be absolutely certain, you can request a formal determination from SSA. Ask specifically about how your OPERS lump sum distribution impacts the earnings test. Get the response in writing. This protects you if there's ever a question later, as SSA is bound by their formal determination even if it was incorrect (assuming you provided accurate information). For what it's worth, I've handled dozens of cases like yours, and pension distributions are NOT counted as earned income for the earnings test.
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Santiago Martinez
•That's excellent advice. I'll definitely request a formal determination when I speak with them. Having something in writing would be such a relief. Thank you for your experienced perspective!
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