Will PTO payout affect my Social Security earnings limit when retiring January 2025?

congrats on retirement! i think it depends on when u actually receive the money not when u earned it. thats how SS tracks it. if check comes in january it counts for 2025 limit.

This question comes up frequently. Social Security counts income when it's received, not when it's earned. What matters is when the payment is available to you, not when you performed the work. So yes, if that PTO payout is processed in January 2025, it will count toward your 2025 earnings limit. You should absolutely speak with your HR department and request that the PTO payout be processed in December 2024. Get this in writing and keep documentation. Many employers are willing to accommodate this request, especially if you explain the Social Security implications. Just make sure to request this change well in advance of year-end processing.

The previous response is correct. Social Security follows what's called the "cash basis" method of accounting. Income counts for the year in which you receive it, not when you earned it. This is stated directly in SSA's Program Operations Manual System (POMS). For earnings test purposes, what matters is when the payment is available to you. If your employer processes that PTO payout in January 2025, it will absolutely count toward your 2025 earnings limit, potentially reducing your benefits if you exceed the annual earnings threshold. Request that your employer process the PTO payout in December 2024. This is a common request, and most payroll departments can accommodate it if given enough notice.

My mom just went through something similar!!! She retired last year and had like $12k in vacation time. Her work tried to pay it in January but she raised HELL with HR and they finally cut her a separate check in December. She said it made a HUGE difference with her SS benefits for the year. You definitely need to push for December payment!!

I've been trying to call SSA directly about this EXACT issue for 3 weeks!!! Been on hold forever and either get disconnected or told to call back. So frustrating when you're trying to plan something important like retirement and can't get basic answers!!!! I have 30+ years of service and they can't even pick up a phone!!!!

good luck getting HR to do anything by december lol. took my HR 3 months just to process my address change. but yeah everyone else is right - its when you get paid not when you worked the hours.

To clarify the confusion in some comments: For Social Security earnings test purposes, income is counted when received, not when earned. This is different from how Social Security calculates your AIME (Average Indexed Monthly Earnings) for benefit calculation purposes. For the earnings test (which is what affects benefits if you're under FRA and working), it's strictly when you receive the money. This is why the December payout is important. The 2025 earnings limit will likely be around $22,320 for those under Full Retirement Age for the full year (exact amount will be announced with the COLA in October 2024). So having an extra $8,700 count toward 2025 could significantly impact your benefits if you're also planning to earn close to the limit with your part-time work.

my neighbor retired last year and her work wouldnt change the date of her vacation payout. she just reduced her hours for the first few months of the year to stay under the SS limit. maybe u could do that if HR wont help?

Update: I spoke with HR today and they said they CAN process my PTO payout in December if I submit the request by November 30th! They're sending me a form to fill out. Thank you everyone for your help - you probably saved me from losing some of my Social Security payments next year!

Fantastic outcome! This is such a great example of why it's worth asking HR about these timing issues. Many people don't realize they can often request changes to payout dates for exactly these reasons. Your story will definitely help others in similar situations. Enjoy your well-deserved retirement and congratulations on getting this sorted out before it became a problem!

Welcome to the community, Jamal! You're absolutely right about how these timing details can make such a huge difference. I've learned so much from threads like this one too. If you're facing a similar PTO payout situation, definitely start the conversation with your HR department early - as Dmitry found out, they often can accommodate these requests but need advance notice. The key thing to remember is that Social Security counts income when you receive it, not when you earned it. Feel free to ask questions here - this community has been incredibly helpful for navigating all the complexities of Social Security and retirement planning!