Social Security earnings limit confusion - do 401k/IRA withdrawals count toward $23,000 penalty threshold?

Good news! Withdrawals from your 401k or IRA do NOT count toward the earnings limit. The SSA only looks at earned income when calculating the annual earnings limit - basically wages or net earnings from self-employment. Investment income, pension payments, and retirement account distributions are all excluded from the calculation. Also, your spouse's income has absolutely no impact on your earnings limit, regardless of whether she's filed for her own benefits or not. The limit is individually applied. Just make sure you stay under that $23,000 threshold with your W-2 income if you don't want to see your benefits reduced. For every $2 you earn above the limit, they'll withhold $1 from your benefits.

i think 401ks count because its all income. my brother got hit with this last year when social security found out about his retirment money and reduced his check. not sure about spouse income tho

I just went through this exact situation!!! The SSA representative told me specifically that ONLY earned income counts toward that limit. My 401k withdrawals didn't affect my benefits AT ALL. But be careful because even though they don't count toward the earnings limit, those withdrawals ARE counted when determining if your Social Security benefits are taxable!!! That's a whole separate headache. And no, your wife's income doesn't count against your limit. However, her income WILL affect whether your benefits are taxable when you file your joint tax return. It's so confusing!!!

I spent THREE DAYS trying to get through to Social Security last month about this exact question!!! Kept getting disconnected or waiting for hours. Finally I used Claimyr (claimyr.com) to get through to an agent in under 20 mins. They have this video showing how it works: https://youtu.be/Z-BRbJw3puU Anyway, the SSA agent confirmed what others are saying - 401k and IRA withdrawals do NOT count toward earnings limit, just your W-2 wages or self-employment income. Spouse's income doesn't count either. But definitely worth checking with an agent directly since your situation might have other factors.

The earnings limit is the most RIDICULOUS policy SSA has!!!! Why should the government penalize people for working? I'm still mad about losing benefits last year because I earned $2,500 over the limit. They should eliminate this completely!!! Why discourage work??? And don't even get me started on the windfall elimination provision that slashed my pension...

Let me clarify the earnings limit rules since there seems to be some confusion: 1. Only EARNED income counts toward the earnings limit (wages, salaries, bonuses, commissions, etc.) 2. The following do NOT count toward the earnings limit: - 401(k) or IRA withdrawals - Pension payments - Annuity payments - Investment income (dividends, interest, capital gains) - Rental income (if you're not a real estate professional) - Social Security benefits 3. Your spouse's income never counts toward YOUR earnings limit, regardless of her filing status. 4. The earnings limit for 2025 is indeed $23,000 if you're under FRA for the full year. For every $2 you earn above that threshold, $1 is withheld from benefits. 5. In the year you reach FRA, a higher limit applies ($61,800 for 2025) with a lower reduction ($1 for every $3 above the limit). 6. After you reach FRA, there is NO earnings limit at all - you can earn any amount without reduction. Hope this helps clarify everything!

my cousin had this problem last year he just didnt report his extra income and everything was fine lol

I went through the same confusion last year! Also totally unrelated but does anyone know if the earnings limit changes if you're on widow benefits instead of retirement? My sister is dealing with that now after losing her husband.