< Back to Social Security Administration

Will Social Security child-in-care survivor benefits be affected by transferring deceased spouse's 401k to inherited IRA?

I lost my husband 6 months ago and I'm currently receiving Social Security survivor benefits for myself (42) and our 10-year-old son. His financial advisor is suggesting I transfer his 401k (about $215,000) into an inherited IRA in my name. I'm worried this might affect the child-in-care benefits we're getting from Social Security. Does anyone know if this kind of asset transfer would count as income for SSA purposes? I'm afraid of losing the monthly payments we depend on. The advisor says it won't affect anything but I'm not sure if he understands how Social Security works.

Dylan Wright

•

I went through something similar last year after my wife passed away. The good news is that transferring a 401k to an inherited IRA is NOT counted as income for Social Security purposes. It's just moving the money from one retirement account to another. What WOULD affect your benefits is if you start taking distributions from that inherited IRA and those distributions push your income over the earnings limit ($24,780 for 2025 if you're under FRA). As long as you're just transferring the money and not taking distributions that put you over the earnings limit, your child-in-care benefits should be safe.

0 coins

That's such a relief! I was really worried about this. So if I understand correctly, just moving the money doesn't count as income, but if I actually start taking money out, then it could affect benefits? Do you know if required minimum distributions would be a problem?

0 coins

Sofia Torres

•

The previous comment isn't completely right! 401k to IRA transfer won't affect benefits BUT it depends on how old your husband was!! If he was already taking RMDs from 401k, you have different rules than if he wasn't. And you might have to take distributions depending on SECURE Act rules. ASK YOUR FINANCIAL ADVISOR ABOUT BENEFICIARY RULES!!

0 coins

Oh no, now I'm confused again. My husband was only 44 when he passed, so he wasn't taking any distributions yet. Does that change things?

0 coins

Let me clear this up - the 401k transfer itself won't affect your benefits at all. It's not counted as income for Social Security purposes. Since your husband was under RMD age, you have options for distributions. As a spouse beneficiary, you can transfer to an inherited IRA and take distributions based on your life expectancy, or you could do a spousal rollover and treat it as your own IRA (delaying distributions until your own RMD age). The only Social Security concern is if you take distributions that, when combined with any other income you have, exceed the earnings limit. For 2025, that's $24,780 if you're collecting before your full retirement age. But remember - investment income doesn't count toward the earnings limit, only earned income (like from a job). RMDs from inherited accounts don't count as earned income for the earnings test.

0 coins

So OP doesnt hav 2 worry about SS benefits cuz of the transfer? i thought ANY money u get counts for SSA?? my cousin lost her benefits when she got inheritance money so im confused now

0 coins

That's a common confusion. For regular Social Security retirement and survivors benefits (like what the original poster is receiving), the only thing that counts against the earnings limit is earned income - meaning income from working. Money from investments, inheritances, interest, dividends, capital gains, and retirement account distributions don't count toward the earnings limit. Your cousin may have been receiving SSI (Supplemental Security Income), which is different and does count almost all income and resources. SSI has strict asset and income limits because it's a needs-based program. Regular Social Security benefits only look at earned income for the earnings limit test.

0 coins

Thank you for that clear explanation! I've been working part-time making about $20,000 a year, so it sounds like as long as I keep my earned income under that earnings limit, I should be fine even if I do start taking some distributions from the inherited IRA. This is all so complicated to navigate while grieving.

0 coins

Ava Rodriguez

•

I had a NIGHTMARE trying to reach someone at Social Security to ask a similar question last year!!! Called for WEEKS and kept getting disconnected or waiting for hours!! If you're still unsure and want to get an official answer from SSA (which is always smart), I recently discovered a service called Claimyr that got me through to a real person at the SSA in less than 10 minutes. You can see how it works at https://youtu.be/Z-BRbJw3puU - saved me so much frustration! Their site is claimyr.com - they basically navigate the phone system for you and call you back when they have an agent on the line. Was totally worth it to finally get my questions answered directly by SSA.

0 coins

Thanks for the tip! It would definitely be reassuring to hear this directly from SSA. I'll check out that video link. The peace of mind would be worth it.

0 coins

Miguel Diaz

•

DONT LISTEN TO ANYONE HERE!!!!!!! SSA will ABSOLUTELY count that money as income! My brother lost ALL his benefits when he got his 401k from his dead wife!!!! The system is RIGGED to take away benefits any way they can!!! They'll find some way to count it, trust me!!!!!

0 coins

I understand your frustration, but there's an important distinction here. The 401k transfer itself won't affect benefits. However, if your brother took a lump sum distribution (cashed out the 401k) rather than transferring it to an inherited IRA, that would indeed be counted as income in the year he received it. Or if he was on SSI rather than regular Social Security, the rules are completely different. For survivor benefits, simply transferring from a 401k to an inherited IRA is not a countable event for the earnings test.

0 coins

Zainab Ahmed

•

this reminds me I need to update my beneficiaries on my 401k... been meaning to do that since my divorce last year

0 coins

Dylan Wright

•

Yes, definitely update those beneficiaries! It's something people often forget after major life changes, but it's so important.

0 coins

One thing nobody mentioned - be careful with that financial advisor! My dad's advisor tried to get him to move money around after mom died and it turned out he was just trying to generate commissions. Make sure your advisor is a fiduciary (legally obligated to act in your best interest) and not just a salesperson. Some advisors don't understand how SS benefits work at all!

0 coins

That's a really good point. He was my husband's advisor for years, but I'll definitely ask if he's a fiduciary. I hadn't even thought about the commission angle.

0 coins

TaxRefund AI

Expert Assistant
Secure

Powered by Claimyr AI

T
I
+
7,306 users helped today