Does my 401k withdrawal count as income for Social Security earnings limit?

Your financial advisor is correct. 401k withdrawals are NOT counted as earnings for the Social Security earnings test. The earnings test only counts wages from employment or net earnings from self-employment. Unearned income like 401k withdrawals, pension payments, investment income, interest, and dividends don't count toward the earnings limit. However, your 401k withdrawals will still count as income for determining whether your Social Security benefits are taxable. If your combined income (adjusted gross income + nontaxable interest + half of your SS benefits) exceeds certain thresholds, up to 85% of your benefits may be taxable.

I was in a similar situation last year and can confirm 401k withdrawals DON'T affect the earnings test. But watch out for the tax situation - I ended up owing more than I expected because my 401k withdrawal pushed more of my SS benefits into taxable territory. Also, if you're having trouble getting clear answers from Social Security on stuff like this, try Claimyr (claimyr.com). I kept getting disconnected when calling SSA directly, but Claimyr got me through to a real person in about 20 minutes. You can see how it works in their video: https://youtu.be/Z-BRbJw3puU

Your brother in law is probably confused about the difference between the earnings test and TAXATION of benefits. Two totally different things!!

BEWARE!!! The SSA people themselves often give WRONG information about this!!! When I called last year the first agent told me 401k withdrawals would count against my earnings limit but that was COMPLETELY WRONG!!! I had to call back and talk to a supervisor who confirmed it DOESN'T count. These rules are so confusing and even their own employees mess them up sometimes. ALWAYS get a second opinion!!!

Let me add some clarity here with the official rules: 1. Earnings test only counts: - Wages from employment (W-2 income) - Net earnings from self-employment 2. The following do NOT count toward earnings test: - 401k/IRA withdrawals - Pension payments - Annuities - Investment income/dividends/interest - Lottery/gambling winnings - Capital gains - Rental income (if you're not a real estate professional) Your brother-in-law is likely confusing the earnings test with the taxation of benefits, or he had other income from working that triggered the reduction. The earnings limit for 2025 if you're under FRA the entire year is indeed $22,320 (with $1 reduction for every $2 over that limit).

My neighbor had this exact problem last year! He took out some 401k money and then got worried about his SS. But turns out it was fine for his benefits but he did have to pay more taxes that year. Just make sure u have enough withheld so u dont get surprised at tax time!!

I think ppl get confused cause theres like two different issues - the earnings test which is about working while on ss and then the tax thing where ur benefits might be taxed... i made that mistake too at first

Thanks everyone for the great information! This community is so helpful. So to summarize what I've learned: 1. My 401k withdrawal will NOT count toward the earnings limit 2. It WILL potentially make more of my SS benefits taxable 3. I should consider having taxes withheld from the 401k withdrawal to avoid a surprise tax bill I really appreciate all your help!

Just want to add one important detail that might help others reading this thread - the earnings test has different limits depending on your age and when you reach full retirement age (FRA). Since you're 63, you're subject to the $22,320 limit for 2025. But if you reach FRA during the year, there's actually a higher monthly limit ($5,910/month in 2025) that applies only to the months before you reach FRA, and then the earnings test disappears completely once you hit FRA. Also, for anyone else dealing with this - keep good records of your 401k withdrawals for tax purposes. Even though they don't affect your SS earnings test, you'll need to report them on your tax return, and they could push you into a higher tax bracket or make more of your benefits taxable as others mentioned. The confusion between earnings test vs. taxation of benefits trips up so many people - you're definitely not alone in being confused about this!

As someone who just went through this same situation at age 64, I can confirm what others have said - 401k withdrawals absolutely do NOT count toward the Social Security earnings limit. I was terrified about this too and called SSA three times to make sure! The key thing to remember is that the earnings test only looks at "earned income" - meaning wages from a job or self-employment income. Retirement account withdrawals are considered "unearned income" along with pensions, dividends, etc. However, I learned the hard way about the tax implications. My $20,000 401k withdrawal last year pushed me into owing about $1,200 more in taxes than I expected because it made 85% of my Social Security benefits taxable instead of just 50%. My tax preparer said I should have had 20% withheld from the 401k withdrawal to cover the extra taxes. So go ahead with your home repairs - your $15,000 withdrawal won't affect your monthly SS check at all. Just consider having taxes withheld or setting some aside for next April!

Great question and I'm glad you asked before making the withdrawal! I went through this exact same worry when I started taking SS at 62. Your financial advisor is absolutely right - 401k withdrawals are NOT counted as earnings for the Social Security earnings test. I was so paranoid about this that I actually called SSA twice to confirm, and both times they assured me that only wages from employment and self-employment income count toward that $22,320 limit. Your $15,000 withdrawal is completely safe from an earnings test perspective. However, definitely plan ahead for the tax impact! When I took out $12,000 from my 401k last year, it bumped me up to the 85% taxation threshold for my SS benefits instead of 50%. I ended up owing an extra $800 in taxes that I wasn't expecting. My advice: have at least 15-20% withheld from your 401k withdrawal for federal taxes. It's much better to get a small refund than scramble to pay extra taxes next April. And don't let your brother-in-law's confusion stress you out - this is one of the most misunderstood aspects of Social Security rules!

I'm new here but dealing with a very similar situation! Just turned 62 and considering early SS while also needing to tap into my 401k for some unexpected medical expenses. Reading through all these responses has been incredibly helpful - it's such a relief to know that 401k withdrawals won't affect the earnings test. I was getting completely conflicting information online and was honestly terrified I'd mess up my benefits. The tax withholding advice is gold! I had no idea that 401k withdrawals could push more of your SS benefits into taxable territory. Definitely going to plan for 20% withholding based on everyone's experiences here. One quick question for the group - does anyone know if the same rules apply to Roth IRA withdrawals? I have some money in a Roth that I could potentially use instead, and I'm wondering if that might be more tax-efficient in this situation since Roth withdrawals are typically tax-free. Thanks everyone for sharing your real-world experiences - this community is amazing!

This is such a helpful thread! I'm 64 and have been putting off taking money from my 401k for home improvements because I was worried about the Social Security impact. Reading everyone's experiences has been incredibly reassuring. I especially appreciate the real numbers people have shared about tax withholding - it sounds like 15-20% is the sweet spot based on multiple experiences here. I'm also intrigued by the Roth IRA suggestion from Maya - I have both traditional and Roth accounts, so it's great to know that Roth contributions could be withdrawn without any tax complications at all. One thing I'm wondering about - for those who had extra taxes due to their 401k withdrawals affecting SS benefit taxation, did you find it was worth consulting a tax professional beforehand? I'm thinking about withdrawing around $25,000 next year and want to make sure I handle this optimally. The peace of mind might be worth the cost of professional advice given the complexity of how this all interacts. Thanks again to everyone who shared their experiences - this community really does help navigate these confusing rules!

I'm going through this exact same situation right now at 63! Just wanted to add my recent experience to reinforce what everyone else has said. I was absolutely terrified about withdrawing from my 401k after starting SS early, but after calling SSA twice and talking to my financial planner, I can confirm - 401k withdrawals definitely DO NOT count toward the earnings test. Only wages and self-employment income count. I withdrew $18,000 last month for some major car repairs and medical bills. Had 18% withheld for taxes based on advice similar to what's been shared here. My monthly SS check stayed exactly the same. The thing that really helped me was keeping a clear distinction between two separate issues: 1. The earnings test (which 401k withdrawals don't affect at all) 2. Income taxation (where 401k withdrawals can make more of your SS benefits taxable) Your brother-in-law probably got confused between these two things, or maybe he had other earned income that triggered the reduction. But your $15,000 withdrawal for home repairs is completely safe from an earnings test perspective. One tip - when you call your 401k provider to request the withdrawal, they'll ask about tax withholding. Don't skip this step! Based on everyone's experiences here, having 15-20% withheld upfront will save you stress at tax time.

Just want to echo what everyone else has said - your financial advisor is absolutely correct! I went through this same worry when I started collecting SS at 62. 401k withdrawals are NOT counted as earnings for the Social Security earnings test, period. I was so anxious about this that I actually printed out the official SSA publication (05-10069) that specifically lists what counts as earnings. Only wages from employment and net self-employment income count toward that $22,320 limit. Retirement account withdrawals, pensions, investment income - none of it counts. Your $15,000 withdrawal is completely safe from affecting your monthly SS benefits. Just be prepared for the tax impact like others mentioned. When I withdrew $20,000 from my 401k last year, it did push more of my SS benefits into taxable territory, but that's a totally separate issue from the earnings test. The confusion is so common - even some SSA phone representatives get it wrong sometimes! But the rules are clear in the official publications. Your home repairs are a go!

I'm new to this community but going through a very similar situation! Just turned 64 and have been collecting SS for about 6 months. I've been hesitant to touch my 401k because of all the confusing information out there about earnings limits. Reading through everyone's experiences here has been incredibly reassuring. It's clear that 401k withdrawals absolutely do NOT count toward the earnings test - only actual wages and self-employment income do. I really appreciate all the specific examples and dollar amounts people have shared. The tax withholding advice is invaluable too. It sounds like most people learned (either by planning ahead or the hard way) that having 15-20% withheld from the 401k withdrawal saves a lot of headaches at tax time. I'm planning to withdraw about $12,000 next month for some needed roof repairs, and I'll definitely be requesting that withholding. One question for the group - has anyone dealt with multiple smaller withdrawals versus one larger withdrawal from a tax planning perspective? I'm wondering if it makes sense to spread my needed $12,000 across a few months or just take it all at once. Thanks for creating such a helpful discussion!

This thread has been incredibly helpful! I'm 65 and just started collecting Social Security last year. I was also confused about whether my IRA withdrawals would affect my benefits, but reading everyone's experiences here confirms what my CPA told me - retirement account withdrawals don't count toward the earnings test at all. What really struck me is how many people mentioned getting wrong information from SSA phone representatives. I had a similar experience where the first person I spoke to gave me completely incorrect information about spousal benefits. It really emphasizes the importance of getting multiple sources and checking the official publications like Laura mentioned. For anyone still worried about this - I've now withdrawn about $30,000 from my traditional IRA over the past year for various expenses, and my Social Security benefits have remained exactly the same each month. The only impact was at tax time where more of my SS benefits became taxable, but that's completely separate from the earnings test. The tax withholding advice here is spot on too. I learned to always have 20% withheld from any retirement account withdrawal - it's saved me from quarterly payment headaches and owing money at tax time. Much better to get a small refund than scramble to pay extra taxes!

I'm dealing with this exact situation right now at 62! Just started collecting SS last month and have been paralyzed with worry about touching my 401k. This thread has been a lifesaver - thank you everyone for sharing your real experiences with actual numbers. The consistent message is so reassuring: 401k withdrawals absolutely DO NOT count toward the Social Security earnings test. Only wages from employment and self-employment income count toward that $22,320 limit for 2025. Your $15,000 withdrawal for home repairs is completely safe from affecting your monthly benefits. I'm particularly grateful for all the tax withholding advice. It sounds like 15-20% withholding is the magic number based on everyone's experiences. I need to withdraw about $8,000 for some medical expenses, and I was planning to just take it without withholding - clearly that would have been a mistake! The distinction between the earnings test (which doesn't apply to 401k withdrawals) and income taxation (which does affect how much of your SS benefits get taxed) is so important. Your brother-in-law was probably confused about this difference, or maybe he had other work income that triggered a benefit reduction. Thanks for asking this question and creating such an informative discussion. This community really helps navigate these confusing retirement rules!

I'm 63 and going through this exact same situation! Just want to add my voice to confirm what everyone else has said - 401k withdrawals absolutely DO NOT affect the Social Security earnings test. I was terrified about this too when I started collecting early benefits last year. I've now made several withdrawals totaling about $22,000 over the past 12 months for various home improvements and unexpected expenses, and my monthly SS check has never changed. The earnings test only cares about wages from working and self-employment income - not retirement account withdrawals. Your financial advisor is 100% correct and your brother-in-law is likely confused between the earnings test and taxation of benefits (which are completely different things). Go ahead with confidence on your $15,000 withdrawal for home repairs! Just echo what others said about tax withholding - definitely have at least 20% withheld when you make the withdrawal. I learned this the hard way on my first withdrawal and ended up owing extra taxes. Having proper withholding from the start makes everything much smoother at tax time. This community has been such a great resource for navigating these confusing rules. Don't let the misinformation stress you out - your withdrawal is completely safe from affecting your monthly benefits!

I'm 64 and went through this exact same worry when I started taking SS benefits early last year! Your financial advisor is absolutely right - 401k withdrawals do NOT count toward the Social Security earnings test at all. I was so anxious about this that I called SSA multiple times to confirm, and they assured me that only wages from employment and net self-employment income count toward that $22,320 limit. Your $15,000 withdrawal for home repairs won't affect your monthly benefits whatsoever. However, definitely plan for the tax implications! I withdrew $16,000 from my 401k last year and while it didn't touch my SS benefits, it did push me into owing about $900 more in taxes because it made 85% of my benefits taxable instead of 50%. I wish I had withheld 20% for taxes upfront - would have saved me scrambling at tax time. Your brother-in-law is probably mixing up the earnings test with benefit taxation, or maybe he had other work income that caused his reduction. These rules are confusing and even some SSA reps get them wrong! But rest assured - retirement account withdrawals are completely separate from the earnings test. Go ahead with those home repairs!