Will my ESOP dividends count as earned income for Social Security survivor benefits earnings limit?

Good news - ESOP dividends are NOT considered earned income for Social Security purposes. The earnings limit only applies to wages from employment or net earnings from self-employment. Dividend income, interest, capital gains, pension payments, and other investment income don't count toward the earnings limit. So you should be able to collect your full survivor benefit at age 60 without any reduction based on those ESOP dividends.

my mom had something similar with my dads pension and dividents after he passed. SS didnt count any of that towards her income limit. only matters if your actually working and making money from a job or self employed.

I have to disagree with the first response. It actually depends on HOW the ESOP is structured and how the dividends are paid. Some ESOPs are considered deferred compensation and CAN count toward the earnings limit. You really need to talk directly to SSA about your specific situation.

Just wanted to add that while your ESOP dividends won't count toward the earnings test, you should still be aware of two important things: 1. When you take survivor benefits at 60, they'll be permanently reduced by about 28.5% compared to waiting until your full retirement age (FRA). That's why your estimate is showing $2,275 instead of the full amount. 2. If you plan to claim your own retirement benefits later, you can switch from survivors to your own benefit at any point if your own benefit would be higher. Since you're turning 60 soon, have you set up your my Social Security account online? That's the easiest way to apply when you're ready.

When i started collecting surviver benefits last year i had the SAME EXACT QUESTION!!! i even went to the SS office and the lady told me different things each time i asked!!! So frustrating!!! But turns out dividends and interest and all that investment stuff DOES NOT count for the earnigns test. Only if you actually work a job or have a buisness. Thank god because my late husbands 401k is what im living on

If you're having trouble getting through to SSA on the phone, I'd recommend using Claimyr. I was in a similar situation trying to get clarity on my survivor benefits and spent days trying to reach someone. Used this service at claimyr.com and they got me connected to a real SSA agent in about 15 minutes. They have a video showing how it works: https://youtu.be/Z-BRbJw3puU - totally worth it for peace of mind on something this important.

To clarify some confusion in this thread: 1. ESOP dividends are definitively NOT counted as earnings for the Social Security earnings test. They're treated as investment income. 2. For 2025, the earnings limit for someone under Full Retirement Age is $22,560 (a 3% increase from 2024's $21,240). 3. Only wages from employment and net earnings from self-employment count toward this limit. 4. The reduction is $1 for every $2 earned above the limit. For the original poster, when you apply for survivor benefits, make sure to specify that your only income is from ESOP dividends to avoid any confusion. These rules are clearly outlined in SSA's POMS section RS 02501.021.

Just want to mention - make sure you're calculating the survivor benefit correctly. My mom thought she'd get one amount, but it ended up being lower because of some obscure rule about my dad's benefit calculation. The estimate you see might not be accurate.

Thanks everyone for the helpful responses! I feel much better knowing that my ESOP dividends won't count toward the earnings limit. I'm going to try to reach SSA before I turn 60 next month to confirm everything and get my application started. Might try that Claimyr service if I can't get through on my own - spending days on hold is just impossible right now. Will update how it goes after I apply!

Good luck with your application! Just wanted to add that you might also want to ask SSA about the "restart" option when you call or apply. Since you're claiming survivor benefits at 60, you'll get a reduced amount, but if your financial situation improves later and you want to delay benefits to get a higher monthly payment, there's a one-time option to withdraw your application within 12 months (you'd have to pay back what you received, but then you could restart at a later age for a higher benefit). It's something to keep in mind since you mentioned needing the income now but your own retirement benefit being small. Not saying you should use it, just good to know all your options!

Just want to emphasize what others have said - you're absolutely right to be cautious about this! The good news is that ESOP dividends are definitely NOT counted as earned income for Social Security's earnings test. I went through something similar when my spouse passed and I was receiving dividends from his company stock plan. The SSA agent I finally spoke with confirmed that only wages from actual employment and self-employment income count toward that $22,560 limit for 2025. Investment income like dividends, interest, pensions, and ESOP distributions are completely separate. When you apply, just make sure to clearly explain that these are ESOP dividends from your late husband's employer plan - that way there's no confusion on their end. You should be able to collect your full survivor benefit without any reduction based on those dividends!

I'm so sorry for your loss, and I understand how stressful it can be navigating Social Security benefits during an already difficult time. The community has given you excellent advice - ESOP dividends are definitely NOT considered earned income for the Social Security earnings test. I work in benefits administration and can confirm that only wages from employment and net self-employment earnings count toward that $22,560 limit for 2025. Your ESOP dividends are classified as investment income, just like any other dividend or interest payments. When you apply, I'd recommend bringing documentation that clearly shows these are ESOP dividend payments from your late husband's employer plan - this will help avoid any confusion during processing. Also, since you mentioned difficulty reaching SSA by phone, you might want to consider scheduling an in-person appointment at your local SSA office if phone wait times are too long. They often have better availability for appointments than their phone lines. Wishing you the best with your application process!

I'm glad to see so many people confirming what you've been told - ESOP dividends definitely won't count toward your earnings limit! I wanted to add one more thing that might be helpful: when you do apply, make sure you have your late husband's Social Security number handy, along with your marriage certificate and his death certificate. SSA will need these documents to process your survivor benefit application. Also, since you mentioned the ESOP dividends are about $3,100 monthly, you might want to keep records of those payments separate from any other income sources - it'll make things clearer if SSA has any questions later. The fact that you're being so thorough about understanding the rules beforehand shows you're handling this really well during what I'm sure is still a difficult time. Best of luck with your application next month!

I'm really sorry for your loss, and I can completely understand your anxiety about navigating these benefits during such a difficult time. The great news is that everyone here is absolutely correct - ESOP dividends are NOT considered earned income for Social Security's earnings test purposes. I went through a very similar situation when I lost my spouse and was receiving distributions from their retirement accounts. The key thing to remember is that the $22,560 earnings limit for 2025 only applies to wages from active employment and self-employment income - not investment returns, dividends, pensions, or distributions from retirement plans. When you apply, I'd suggest being very clear that these are ESOP dividend payments from your late husband's employer plan, not wages or compensation for current work. Having your documentation ready (like the ESOP statements) will help make the process smoother. You're being smart to get this sorted out before you turn 60 and apply. Hang in there - you've got this!

I'm so glad this thread has been helpful for you! As someone who works with retirement benefits, I just wanted to add one small but important point: when you do apply for survivor benefits, you might want to ask SSA about whether you should also file a "protective filing" for your own retirement benefits. Even though your own benefit will be much smaller, filing a protective claim can preserve your filing date for future reference. This won't affect your current survivor benefits at all, but it could be useful down the road if there are any changes to the rules or your situation. It's just something to ask about when you're already talking to them - probably won't be necessary, but good to know all your options. Best of luck with everything, and I hope the application process goes smoothly for you!