Social Security earnings limit with deferred compensation - counted as income for retirement benefits?

Non-qualified deferred compensation payments generally do NOT count toward the Social Security earnings test. The key is whether you're performing current services for those payments. Since these are payments for past work distributed over time, they shouldn't count toward the earnings limit. From the SSA Program Operations Manual System (POMS): 'Pay for services performed in a year before the year of receipt does not count as special payments if the employee performed no services in the year of receipt.' You might want to get this confirmed in writing from SSA though, as different reps sometimes interpret rules differently.

Went thru this exact thing last yr! My deferd comp did NOT count for ernings test. But the SSA rep told me i had to bring proof to office that showed it was for PAST work not current work. Get something from HR that says these r payments for services already performed.

I think you need to be careful here. While properly structured deferred compensation shouldn't count toward the earnings test, how your specific plan is documented matters significantly. The IRS and SSA look at the economic reality, not just labels. Factors they consider: 1. Was this truly for past services only? 2. Does your deferred comp agreement have any provisions requiring you to be available for consulting? 3. How is it reported on tax forms (look at Box 11 on W-2 or 1099-MISC) If it's reported as current wages on your W-2, SSA may count it regardless of what HR tells you it is. I'd recommend getting a statement from payroll about how exactly it will be reported to the IRS each year.

My husband had deferred comp and social security counted it against earnings limit!!!! We had to pay back over $7,000 in benefits they said we shouldnt have gotten!!!! Make sure you get something IN WRITING from SS before you make any decisions!

dont trust what reps tell you on the phone they dont know what theyre talking about half the time. i called about disability question last month and the 1st person told me one thing then i called again and got told something completely different!

I want to add some important clarification about your situation. The critical factor is whether your deferred compensation agreement has ANY requirements for current services. If your agreement includes that "limited availability for transition questions" clause, this could potentially complicate things. The SSA might interpret this as requiring current services, even if minimal. What you need is a determination from SSA on YOUR specific situation. Bring your complete deferred compensation agreement to your local SSA office and ask for a formal determination. Get the decision in writing. Also, check how these payments appear on your tax documents. If they show up in Box 1 of a W-2 as current wages rather than as deferred compensation in Box 11, this could trigger the earnings test regardless of the nature of the payments.

One important thing to remember is that even if your deferred compensation DOES count toward the earnings test, you're not permanently losing that money from Social Security. When you reach your Full Retirement Age, SSA will recalculate your benefit amount to give you credit for the months when benefits were reduced or withheld. So while you might face reductions now, you'll get higher monthly payments after FRA to make up for it. This is something many people don't realize about the earnings test.

UPDATE: I visited my local SSA office with all my paperwork today. The claims specialist reviewed my deferred comp agreement and confirmed that since the payments are for PAST services (with only minimal transition assistance), they do NOT count toward the earnings test! She explained that the key factors were: 1. The payments would continue even if I provided no transition assistance 2. The payments are for work already performed 3. The agreement clearly shows no correlation between current services and payment amounts She gave me a written statement for my records. What a relief! Thanks everyone for your help with this confusing issue.