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.

Congratulations on getting this resolved! Your experience highlights exactly why it's so important to get a formal determination rather than relying on phone advice. The fact that you got three different answers from SSA phone reps but a clear, definitive answer from the local office specialist really shows the value of bringing documentation in person. Your case is a perfect example for others - the key factors the specialist mentioned (payments continuing regardless of transition help, compensation for past work, no correlation between current services and payment amounts) are exactly what SSA looks for when making these determinations. Thanks for taking the time to update everyone with the outcome. This thread will be really helpful for future community members dealing with similar deferred compensation questions!

This is such a valuable thread for anyone dealing with deferred compensation questions! Your experience really demonstrates the importance of persistence and getting proper documentation. I'm curious - did the SSA specialist mention anything about how this might be handled differently if the deferred comp was structured as a SERP (Supplemental Executive Retirement Plan) versus a standard non-qualified deferred compensation arrangement? I've heard there can be nuances in how different types of deferred comp plans are treated. Also, for future reference, do you know if there's a specific SSA form or process number they use for these earnings test determinations? It might be helpful for others to know what to request when they visit their local office. Great job advocating for yourself and getting the clarity you needed!

This is such a helpful thread! I'm in a similar situation but with a twist - I have both deferred compensation AND stock options that are vesting over the next few years. The deferred comp seems straightforward based on your experience, but I'm wondering if anyone knows how stock option exercises are treated under the earnings test? My concern is that when I exercise the options, the gain might be considered "earned income" even though the options were granted years ago when I was actively working. The tax treatment shows it as W-2 income, but like your deferred comp, it's really compensation for past services. Has anyone dealt with stock options and Social Security earnings limits? I'm trying to figure out if I should exercise them all before I start collecting SS or if I can spread them out over time without penalty. Your approach of getting a formal determination from the local office sounds like the way to go - I'll definitely be bringing all my documentation in person rather than trying to get answers over the phone!

This is such an informative discussion! As someone who's been helping people navigate Social Security issues for years, I want to emphasize how perfectly this thread illustrates the importance of getting proper documentation and expert review. The confusion you experienced with phone representatives is unfortunately very common. Social Security's earnings test rules, especially around deferred compensation, are some of the most complex areas of the program. Many general customer service reps simply don't have the specialized training to handle these nuanced situations accurately. Your success story really highlights the best practices for anyone dealing with similar issues: 1. **Document everything** - Bring your complete agreements, not just summaries 2. **Visit in person** - Local office specialists have more expertise than phone reps 3. **Request formal determinations** - Get decisions in writing for your protection 4. **Use specific language** - Ask for "earnings test determination" to get routed correctly For future readers dealing with deferred compensation questions, remember that the SSA looks at the economic reality of your situation, not just labels. The three factors the specialist mentioned in your case are exactly what they evaluate: - Whether payments would continue regardless of any current services - Whether compensation is for work already performed - Whether there's any correlation between current services and payment amounts Thanks for sharing your experience and following up with the resolution - this kind of real-world information is invaluable for our community!

This has been such an educational thread! I'm dealing with a similar situation but haven't taken action yet. I have a severance package that includes both a lump sum payment and continued health insurance premiums paid by my former employer for 18 months. I'm wondering if those employer-paid premiums might be considered compensation that could affect the earnings test? My severance agreement states the payments are for "past services and to aid in transition," but doesn't specify whether the insurance premium payments are considered wages or benefits. I'm planning to follow your excellent example and visit my local SSA office with all the documentation, but wanted to see if anyone has experience with employer-paid benefits during severance. The inconsistency in phone representative answers you experienced really concerns me - it's clear that getting that formal written determination is crucial for protecting yourself down the road. Thanks for sharing your process and outcome!

What an incredibly thorough and helpful discussion! As someone who works in HR and regularly deals with deferred compensation questions, I wanted to add a perspective from the employer side that might be useful for others. When employees ask us about how their deferred comp will be treated by Social Security, we always recommend they get their own determination from SSA because we simply can't provide that advice - it's outside our expertise and the rules can be very situation-specific. However, what we CAN help with is providing clear documentation about the nature of the payments. If you're in a similar situation, here's what you should request from your former employer: 1. **A letter clearly stating the payments are for past services** - This should specify the time period when the services were performed 2. **Confirmation of how the payments will be reported** - Whether they'll appear in Box 1 (current wages) or Box 11 (deferred comp) of your W-2 3. **Details about any ongoing service requirements** - Even minimal consulting or availability clauses can complicate things The success story here really emphasizes why getting that formal SSA determination is so important. From what I've seen, employers' HR departments often don't fully understand the Social Security implications, so you really need to be your own advocate. Great job to everyone who shared their experiences - this thread is a masterclass in how to handle complex Social Security issues properly!

This entire thread should be pinned as a resource for anyone dealing with deferred compensation questions! The journey from confusion with phone reps to getting a clear written determination really shows the importance of persistence and proper documentation. As someone who's been considering early retirement with a similar deferred comp situation, I'm grateful for everyone who shared their experiences - both positive and negative outcomes. The key takeaways seem to be: 1. Never rely solely on phone advice for complex earnings test questions 2. Bring ALL documentation to your local SSA office 3. Request a "formal determination regarding deferred compensation and earnings test applicability" 4. Get everything in writing for your records 5. Pay attention to how payments are reported on tax forms (Box 1 vs Box 11) The HR perspective about what documentation to request from employers was especially helpful. I'm going to reach out to my benefits department tomorrow to start gathering those materials before I make any retirement decisions. Thanks to everyone who contributed - this is exactly the kind of real-world guidance that makes this community so valuable!

This thread has been incredibly valuable! As someone who handles retirement planning, I see clients struggle with deferred compensation and Social Security earnings test questions regularly. Your experience perfectly illustrates why I always advise clients to get formal determinations from SSA rather than relying on phone guidance. One additional point for future readers: timing matters significantly. If you're planning to claim Social Security early and have deferred compensation, try to get this determination BEFORE you file your initial claim. It's much easier to plan around the rules than to deal with potential overpayments and recalculations later. Also, keep in mind that if your situation changes (like if your former employer modifies the deferred comp agreement or adds consulting requirements), you may need a new determination. The written determination you received is based on the specific terms in effect at the time. Thanks for sharing such a detailed account of your process and outcome - this will definitely help others avoid the confusion and stress you experienced with those contradictory phone responses!

This has been such an enlightening thread! As someone approaching retirement age myself, I had no idea that deferred compensation could create such complexity with Social Security earnings limits. The contrast between getting three different answers from phone representatives versus the clear, definitive guidance from the local office specialist really highlights a systemic issue with how these complex questions are handled. What impressed me most about your approach was the thoroughness - bringing complete documentation, asking for a formal determination using specific terminology, and most importantly, getting everything in writing. That written statement could be crucial if this issue ever comes up in a future review or audit. I'm curious about one aspect that wasn't fully explored: did the specialist mention anything about how frequently these determinations are reviewed, or whether SSA might revisit this decision if their interpretation of the rules changes in the future? Given how complex this area seems to be, I'm wondering if there's any risk that a favorable determination today might be challenged down the road. Regardless, your systematic approach and willingness to share the detailed outcome will undoubtedly help many others facing similar situations. This thread should definitely be bookmarked as a resource for anyone dealing with non-traditional compensation arrangements and Social Security!

As someone who recently went through a similar situation with deferred compensation, I can't thank you enough for sharing this detailed experience! Your methodical approach and the final successful outcome provide such valuable guidance for others facing this confusing situation. What really resonates with me is the frustration of getting three completely different answers from SSA phone representatives. I had a similar experience with a different Social Security question last year - it's clear that the phone system just isn't equipped to handle these nuanced situations properly. Your success story demonstrates perfectly why the local office visit with complete documentation is so crucial. The fact that the specialist was able to give you a definitive answer with written confirmation shows the value of dealing with someone who actually has expertise in earnings test determinations. I'm particularly grateful for your detailed breakdown of the key factors the specialist considered - that framework (payments continuing regardless of minimal services, compensation for past work, no correlation between current services and payment amounts) will be incredibly helpful for anyone trying to evaluate their own deferred compensation arrangements. Thanks for taking the time to update everyone with the resolution and for creating such a comprehensive resource for future community members dealing with similar issues!

What an incredibly comprehensive and valuable discussion thread! As someone who's currently navigating pre-retirement planning with multiple deferred compensation arrangements, this has been absolutely enlightening. The journey from three contradictory phone responses to a clear written determination really demonstrates the critical importance of persistence when dealing with complex Social Security issues. I'm particularly struck by how the local office specialist was able to provide definitive guidance based on the specific factors in your agreement - something the phone representatives clearly weren't equipped to handle. Your systematic approach has given me a perfect roadmap for my own situation: gather complete documentation, visit the local office in person, request a "formal determination regarding deferred compensation and earnings test applicability," and most importantly, get everything in writing. The key factors the specialist identified - payments continuing regardless of minimal services, compensation for past work, and no correlation between current services and payment amounts - provide an excellent framework for evaluating any deferred compensation arrangement. This thread should definitely be preserved as a resource for anyone facing similar situations. The collective knowledge shared here, from the HR perspective on documentation to the professional insights on timing, creates a comprehensive guide that's far more valuable than any individual consultation. Thank you to everyone who contributed their experiences and expertise - you've created something truly helpful for the community!

This thread is absolutely incredible - what a masterclass in how to handle complex Social Security determinations! As someone who's been lurking in this community for a while but never posted, I felt compelled to contribute because this discussion has been so valuable. I'm currently 61 and have been putting off early retirement specifically because of uncertainty around how my deferred compensation would interact with Social Security earnings limits. Reading through everyone's experiences, especially the original poster's journey from confusion to clarity, has given me the confidence to move forward with getting my own formal determination. The contrast between the inconsistent phone advice and the expertise of the local office specialist really highlights a gap in SSA's phone support system for complex issues. It's concerning that people could make major financial decisions based on incorrect phone guidance, but it's also reassuring to know there's a reliable path to accurate information through the local offices. I'm particularly grateful for the HR professional's advice about what documentation to request from employers. I never would have thought to ask specifically about Box 1 vs Box 11 reporting, but that could make all the difference in how SSA treats these payments. This thread should definitely be featured as a community resource - it's the most comprehensive guide I've seen anywhere on navigating deferred compensation and Social Security earnings test issues. Thank you to everyone who shared their knowledge and experiences!