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.

As a newcomer to this community, I really appreciate all the detailed responses here! I'm in a similar situation at 62 and was totally confused about the earnings limit rules. The clarification that retirement account withdrawals don't count toward the $23,000 limit is incredibly helpful. One follow-up question - I see mention of the limit being different in the year you reach FRA. If my FRA is 67 and I turn 67 in November 2025, does that higher $61,800 limit apply to my entire 2025 earnings, or just from November forward? I'm planning my work schedule for this year and want to make sure I understand the timing correctly. Thanks again to everyone who shared their experiences - this is exactly the kind of real-world advice that's so hard to find on the official SSA website!

As someone who just went through the Social Security application process at 64, I can confirm what others have said - retirement account withdrawals definitely don't count toward the earnings limit! I was so worried about this initially because I need to take some distributions from my 401k to cover expenses while working part-time. What really helped me was getting everything in writing from SSA. When I called (took forever to get through), I specifically asked the representative to send me a letter confirming that my IRA withdrawals wouldn't affect my earnings limit calculation. Having that documentation gave me peace of mind. One thing I'd add - if you're doing any consulting or freelance work on top of your part-time W-2 job, make sure to track that self-employment income carefully since it DOES count toward the limit. I almost got caught off guard by some small 1099 work I was doing on the side. Good luck with your application process! The waiting and uncertainty is the hardest part, but once you get it sorted out, it's such a relief.

As a newcomer to this community, I want to thank everyone for the incredibly detailed and helpful responses! I'm 62 and just starting to research my Social Security options, and this thread has been more informative than hours of trying to navigate the SSA website. The clarification about retirement account withdrawals not counting toward the earnings limit is huge for my planning. I was worried I'd have to choose between taking needed distributions from my IRA and working part-time, but now I understand I can do both as long as my earned income stays under $23,000. I'm particularly grateful for the practical tips about getting documentation in writing from SSA and tracking all forms of self-employment income. Those are the kind of real-world details you just don't find in the official guidance. One question I haven't seen addressed - does anyone know if there are any special considerations for people who have both W-2 income and Schedule C self-employment income? I do some part-time consulting that would be 1099 work, and I want to make sure I understand how that gets calculated toward the limit alongside my regular job. Thanks again to this community for sharing your experiences - it's exactly what people like me need when trying to navigate this confusing system!

As a newcomer to this community, I'm amazed by the wealth of practical knowledge shared here! I'm 64 and have been putting off filing for Social Security because I was so confused about the earnings limit rules, especially regarding my retirement account withdrawals. Reading through all these responses has been incredibly reassuring. The consistent confirmation that 401k and IRA withdrawals don't count toward the $23,000 earnings limit is exactly what I needed to hear. I've been hesitant to start taking my benefits because I need to withdraw about $15,000 annually from my IRA to supplement my part-time income, and I was terrified this would push me over the limit. The advice about getting written confirmation from SSA is brilliant - I'm definitely going to request that documentation when I call. And the tip about using one of those callback services might save me from the hours-long hold times I've been dreading. One thing I'm curious about - has anyone dealt with the situation where you accidentally go slightly over the earnings limit? Like what happens if you earn $24,000 instead of staying under $23,000? Do they reduce your benefits for the entire year, or is there some kind of monthly calculation that might soften the impact? Thank you all for creating such a helpful and supportive community!

As a newcomer to this community, I'm incredibly grateful for all the detailed information shared here! I'm 65 and was completely overwhelmed trying to understand the Social Security earnings limit rules on my own. The consistent confirmation that retirement account withdrawals don't count toward the $23,000 earnings limit has been a huge relief. I've been hesitant to file because I thought my required minimum distributions from my 401k would push me over the threshold, but now I understand those are considered unearned income and completely separate from the earnings calculation. I'm particularly impressed by the practical advice about getting written documentation from SSA and using tracking spreadsheets to monitor earnings throughout the year. These are the kinds of real-world tips that make all the difference when you're actually trying to navigate the system. One question I haven't seen addressed - for those who have seasonal work patterns (like working more hours during busy seasons), do you find it better to spread your earnings evenly throughout the year, or does it not matter as long as you stay under the annual $23,000 limit? I do tax preparation work that's heavily concentrated in the first few months of the year, and I want to make sure there aren't any monthly reporting issues I should be aware of. Thank you all for creating such a supportive and knowledgeable community - this thread alone has answered questions I've been struggling with for months!

As a newcomer to this community, I want to echo everyone's appreciation for the incredibly helpful and detailed responses in this thread! I'm 63 and have been anxiously researching Social Security options for months, and this single conversation has provided more clarity than countless hours spent trying to decipher the official SSA materials. The confirmation that retirement account withdrawals don't count toward the earnings limit is absolutely crucial for my planning. I was genuinely considering delaying my Social Security application because I thought my IRA distributions would conflict with my part-time work income, but now I understand they're completely separate calculations. What strikes me most about this community is how people share not just the rules, but the practical strategies for managing them - like requesting written documentation from SSA, using tracking spreadsheets, and even tips for actually getting through on the phone. These real-world insights are invaluable when you're trying to navigate such a complex system. I'm particularly grateful for the clarification about seasonal income patterns and the proportional calculations if you accidentally exceed the limit. Knowing that going slightly over isn't catastrophic, and understanding exactly how the withholding works, takes away a lot of the anxiety around this decision. Thank you to everyone who has shared their experiences and knowledge. This is exactly the kind of supportive community that makes such a difference when facing these major financial decisions!