Social Security earnings test confusion - does unused PTO count toward monthly limit in retirement year?

Unfortunately, the second rep is correct. According to SSA rules, PTO/vacation pay does count toward your earnings limit in the month you RECEIVE it, but it's considered as earned during the months you actually worked and accrued it. This is specified in SSA's Program Operations Manual System (POMS). Since you earned the PTO January-May, it's counted as earnings spread across those months, not as earnings in the month they paid it out. This is different from how regular wages are counted (which are counted when paid). You can request a reconsideration if you have it in writing that the first rep gave you incorrect information. SSA sometimes allows for misinformation adjustments.

same thing happend to me last yr!!! SSA told me 2 different things about vacation pay and i ended up owing them money back. so annoying how they cant even get there own rules right

This is why I ALWAYS write down the name and ID number of every SSA person I talk to and make them send me an email confirming what they told me. They contradict themselves constantly, and then WE get stuck with the consequences. The earnings test is especially confusing because there's the annual test AND the monthly test in your first retirement year. For anyone reading: in your first year of retirement, you can use the monthly earnings test instead of the annual test, but ANY income earned before retirement counts against you - including vacation payouts from time earned while working!

I went through something similar when I retired. For the earnings test, SSA considers vacation/sick pay as earned when you performed the work that earned the leave, not when you received the payment. So your vacation payout technically counts as earnings during the months you actually worked and accrued that vacation time. If you're over the monthly limit, you'll lose benefits for that month. For 2025, if you earn over $2,340 in a month (for those under FRA), you don't receive benefits for that month. One strategy: if this was a significant amount of PTO, you might want to consider withdrawing your application (Form SSA-521) and reapplying later. You have 12 months from when benefits started to do this, but you'd have to repay any benefits received. Might be worth it to avoid the earnings test issues.

i think your getting alot of conflicting info here too! my understanding is that PTO is counted when PAID not when EARNED so if u got the payout in july then it counts toward july's limit. but vacation time earned across months is different than regular wages. check SSA POMS section RS 02505.240 (had to look that up lol) the real question is will they actually catch this?? sometimes SSA doesnt even notice these things until years later during a random audit and by then its a huge mess to fix!

Have you tried calling SSA to speak with a supervisor about this? I spent HOURS trying to get through to them last month about my disability review and kept getting disconnected. My daughter told me about a service called Claimyr that got me through to a real person at SSA in about 10 minutes. I was shocked it actually worked! You just go to claimyr.com and they call SSA for you, then connect you when they get a rep. There's a video demo at https://youtu.be/Z-BRbJw3puU that shows how it works. A supervisor should be able to give you the definitive answer on how your PTO payout affects your benefits. The phone agents often give conflicting information as you've discovered.

Here's something else to consider: If you're significantly over the monthly limit, you'll lose benefits for that month. But if your annual earnings are still under the yearly limit ($22,320 for 2025 for those under FRA), you might be better off using the ANNUAL earnings test rather than the monthly test. The monthly test is only advantageous in the first year of retirement if you have several months with little to no earnings. You get to choose whichever method is more beneficial to you. So calculate your total 2025 earnings and see if staying with the annual test might let you keep more of your benefits despite the PTO payout.

Since you're over both the monthly and annual limits, your best bet might be to withdraw your application entirely (Form SSA-521) and reapply in January 2026. Yes, you'd have to repay what you've received, but your benefit amount will be slightly higher due to delayed retirement credits, AND you'd avoid all the earnings test complications. Or just accept that you'll lose some months of benefits this year due to the earnings test. For every $2 over the annual limit, they withhold $1 in benefits. With $42,000 in earnings, that's $19,680 over the limit, so they'd withhold about $9,840 in benefits.

wait i'm confused about something - doesn't the montly earnings test only apply AFTER you retire? so if you retired in june, then the monthly test would only apply to july-december, and jan-june would use the annual test? that would explain why vacation pay from jan-may counts, because those months use the annual test not the montly test. This whole system is SO confusing!!

This exactly why im waiting until my FRA to file! Too many gotchas with the earnings test. My neighbor had to pay back almost $7000 because her employer paid out a bonus in January that was earned the previous year. The whole system seems designed to trip people up.

I'm in a similar situation and just wanted to share what I learned from my experience. I retired mid-year at 62 and got burned by the earnings test too. The key thing I wish I'd understood is that SSA has two different tests in your retirement year - you can use whichever is more favorable. One thing that might help: if you haven't already, request a detailed breakdown from SSA showing exactly how they're calculating your earnings test. Sometimes they make errors in how they allocate earnings to specific months, especially with lump sum payments like PTO. Also, don't feel bad about the conflicting information from SSA reps. I called 4 times about my situation and got 3 different answers. It's unfortunately very common. The system is incredibly complex and even their own staff struggle with the nuances. Have you considered consulting with a Social Security attorney? Many offer free consultations and might be able to help you navigate the appeals process if SSA made an error based on their initial guidance to you.

I'm dealing with a somewhat similar situation and wanted to share what I learned from my research. The confusion around PTO payouts and the earnings test seems to stem from how SSA treats different types of payments. From what I understand after digging through the POMS manual, vacation pay that's paid out upon retirement is indeed counted as earnings for the months when you actually earned/accrued that time, not when you received the payment. This is different from regular wages which are counted when paid. However, there's an important distinction: if your PTO payout represents time that was already earned and could have been taken as time off during those months, it's allocated back to those months. But if it's a "use it or lose it" situation where you literally couldn't have taken the time off, there might be different rules that apply. The fact that you received conflicting information from two different SSA reps is unfortunately very common with these complex situations. I'd suggest requesting to speak with a technical expert or supervisor who specializes in earnings test calculations. Regular phone reps often don't have the training to handle these nuanced scenarios correctly. Also, since you made your decision based on official SSA guidance (even if it was incorrect), you might have grounds for an appeal or exception. Document everything about that first conversation - date, time, what was discussed, etc.

I've been following this thread with interest as someone who works in benefits administration. The confusion you're experiencing is unfortunately very common, and I want to emphasize a few key points that might help clarify your situation. First, the second SSA rep is correct about PTO counting toward your earnings limit. The critical factor is that vacation pay is attributed to the months when you actually performed the work that earned that time off, regardless of when it's paid out. This is clearly outlined in POMS RS 02505.240. However, given that you received incorrect guidance from the first rep that influenced your decision to start benefits, you may have recourse. SSA does have provisions for situations where beneficiaries acted on erroneous information provided by their staff. I'd recommend: 1. File a written complaint documenting the incorrect advice you received 2. Request a supervisor review of your case 3. Ask specifically about "administrative finality" exceptions for cases involving SSA misinformation Regarding your options going forward, the withdrawal suggestion mentioned earlier (Form SSA-521) might indeed be worth considering if you're significantly over the earnings limits. You have 12 months from your benefit start date to withdraw your application, repay what you've received, and reapply later without penalty. The earnings test is one of the most complex aspects of Social Security, and even SSA employees frequently provide conflicting information. Don't blame yourself for this situation - the system is genuinely confusing and poorly explained.

I'm sorry you're dealing with this frustrating situation - getting conflicting information from SSA representatives is unfortunately all too common, especially with complex earnings test scenarios. Based on what you've described and the helpful responses from others here, it sounds like you have a few potential paths forward: 1. **Document and escalate the misinformation**: Since you made your filing decision based on incorrect advice from the first SSA rep, definitely document that July 15th conversation as thoroughly as possible and request a supervisor review. SSA does have provisions for cases where their misinformation led to adverse outcomes for beneficiaries. 2. **Get a detailed earnings calculation**: Request that SSA provide you with a written breakdown of exactly how they're allocating your $4,800 PTO payout across the months you earned it. This will help you understand the full impact and verify they're applying the rules correctly. 3. **Consider Form SSA-521 withdrawal**: Given that you're significantly over both monthly and annual limits, withdrawing your application entirely and reapplying next year might actually save you money in the long run, especially when you factor in the delayed retirement credits you'd earn. The key is getting accurate information from someone at SSA who actually understands these complex rules, rather than getting different answers from different phone reps. I'd recommend specifically asking to speak with a technical expert on earnings test calculations when you call back. Keep us updated on how this resolves - your experience will definitely help others who find themselves in similar situations!

I'm a newcomer to this community but wanted to share some encouragement after reading through this thread. Your situation highlights exactly why navigating Social Security benefits can be so overwhelming for people approaching retirement. What strikes me most about your experience is how you did everything "right" - you called SSA for guidance before making your decision, yet still ended up in this predicament due to conflicting information from their own representatives. That's incredibly frustrating and unfortunately seems to be a common theme based on what others have shared here. The advice you've received about documenting that July 15th conversation and requesting a technical expert review seems spot-on. Given the significant financial impact ($9,840 in potential withheld benefits based on the calculations others provided), it's definitely worth pursuing every avenue available to you. The Form SSA-521 withdrawal option that several people mentioned is intriguing - starting fresh next year without the earnings test complications might actually be the cleanest solution, especially if the delayed retirement credits help offset the hassle of repaying benefits already received. Thank you for sharing your experience in such detail. As someone who will be facing these same decisions in a few years, threads like this are invaluable for understanding the real-world complexities that go far beyond what you can learn from SSA's website alone. Wishing you the best of luck in getting this resolved!

As someone new to this community, I wanted to thank everyone for sharing such detailed and helpful information on this complex topic. Reading through this thread has been incredibly educational about the nuances of Social Security earnings tests. Amelia, your situation is unfortunately a perfect example of how SSA's own inconsistent guidance can create real financial consequences for beneficiaries. The fact that you received conflicting information from two different representatives about the same PTO payout issue is exactly why so many people struggle with these decisions. From what I've learned reading through everyone's responses, it seems like your best path forward is: 1. Get that detailed written calculation from SSA showing exactly how they're allocating your PTO across the months you earned it 2. Document your July 15th conversation and request a supervisor review of the misinformation you received 3. Seriously consider the Form SSA-521 withdrawal option to start fresh in 2026 The withdrawal option seems particularly attractive given that you'd avoid all these earnings test complications AND get the delayed retirement credits. Sometimes the "cleanest" solution, even if it means repaying benefits already received, can save significant headaches and money in the long run. Please do update us on how this resolves - your experience will definitely help others facing similar situations navigate these complex rules more effectively. Good luck!

I'm new to this community but wanted to share some thoughts after reading through this entire discussion. Your situation really illustrates how challenging it can be to navigate Social Security rules, even when you're trying to do everything correctly. What's particularly concerning is that you received definitive guidance from an SSA representative that directly influenced your decision to start benefits, only to later be told the opposite by another rep. This kind of inconsistency from SSA staff seems to be a recurring theme based on what others have shared here. I think the advice about pursuing the Form SSA-521 withdrawal option deserves serious consideration. Yes, you'd have to repay the benefits you've already received, but given the potential $9,840 in withheld benefits under the earnings test, starting fresh in 2026 might actually save you money. Plus, you'd get those delayed retirement credits, which would increase your monthly benefit amount going forward. The documentation suggestions from others are also crucial - that July 15th conversation where you received incorrect guidance could be grounds for an administrative exception, especially since it directly caused you to make a decision that resulted in financial harm. This thread has been incredibly educational for someone like me who will be facing these decisions in the future. Thank you for sharing your experience so openly - it's helping others understand the real-world complexities that go far beyond what SSA's website explains.

As a newcomer to this community, I wanted to add my voice to the chorus of support you're receiving. Your experience perfectly illustrates why so many people find Social Security rules intimidating - even when you try to get official guidance, you can end up with conflicting information that leads to real financial consequences. I'm particularly struck by how you received such definitive advice from the first SSA rep about PTO not counting toward your monthly limit, only to be told the complete opposite later. This kind of inconsistency from their own staff seems inexcusable given the significant financial impact on beneficiaries. From reading through all the excellent advice here, it seems like you have two strong options: 1) Document that July 15th conversation thoroughly and pursue an administrative exception for SSA misinformation, or 2) Use Form SSA-521 to withdraw your application entirely and start fresh in 2026 without any earnings test complications. The withdrawal option is looking increasingly attractive when you consider that you'd avoid the $9,840 in potential withheld benefits, get delayed retirement credits for higher monthly payments, and have the peace of mind of starting over without all these complex calculations and appeals. Thank you for sharing this experience so openly - it's an invaluable learning opportunity for those of us who will face these same decisions in the future. Your willingness to document this process will undoubtedly help others avoid similar pitfalls or at least know what questions to ask and insist on getting answers in writing.

As a newcomer to this community, I'm really impressed by the depth of knowledge and support being shared here. Your situation, Amelia, is unfortunately a textbook example of why navigating Social Security can be so treacherous - even when you try to do everything right by calling for official guidance first. What really stands out to me is that you made a major financial decision (starting benefits early) based on specific advice from an SSA representative, only to discover later that the advice was incorrect. That July 15th conversation where you were told PTO wouldn't count toward your monthly limit should absolutely be documented and escalated - SSA has provisions for situations where their misinformation causes financial harm to beneficiaries. The Form SSA-521 withdrawal option that several people have mentioned seems like it deserves serious consideration. Yes, you'd need to repay benefits already received, but when you factor in avoiding $9,840 in potential withheld benefits plus gaining delayed retirement credits for higher future payments, the math might actually work in your favor. I'm curious - have you been able to calculate approximately how much you've received in benefits so far? That would help determine if the withdrawal route makes financial sense compared to dealing with the earnings test complications. Thank you for sharing this experience so thoroughly. As someone who will be facing these same decisions in a few years, this thread has been incredibly educational about the real-world complexities that go far beyond what SSA's website explains.