Will rolling over employer 401k to individual 401k affect my Social Security benefits?

Good news - rolling over a 401k, whether to an individual 401k or an IRA, has absolutely no impact on your Social Security benefits. Social Security benefits are calculated based on your lifetime earnings record (specifically your top 35 years of earnings where you paid FICA taxes), not on your retirement account balances or activities. The only way retirement accounts might indirectly affect Social Security is if you withdraw from them in retirement and those withdrawals push your income high enough to make a portion of your SS benefits taxable. But that's a tax issue, not a benefit calculation issue. Congratulations on starting your consulting business! Just make sure you're paying your self-employment taxes properly, as those will continue to contribute to your Social Security earnings record.

i rolled over mine last yr and nothing changed with SS. its all seperate systems. your 401k could be 2 million or zero and SS doesnt care lol. they only look at your past salary that you paid SS taxes on.

I actually just went through this exact situation last year. Rolled over about $380k from my employer 401k to an individual 401k for my consulting business. Zero impact on Social Security. The SSA doesn't even know about the rollover - those are reported to the IRS, not Social Security Administration. They're completely separate systems. One thing to watch out for though - make sure you understand the rules for individual 401ks. They're great if you're self-employed with no employees (or just a spouse), but they have different contribution limits and administrative requirements than regular 401ks. You'll need to file Form 5500-EZ once your plan exceeds $250,000 in assets. But again, none of this affects your Social Security benefits in any way.

I spent HOURS on hold with Social Security last month trying to ask a similar question about my retirement accounts and never got through! The phone system is absolutely useless!! I kept getting disconnected after waiting for over an hour each time. I had to physically go to my local office and wait 3 hours just to speak with someone. There MUST be a better way to get information from them.

My wife rolled over her 403b (which is basically the same as a 401k) to an IRA last year. NO EFFECT on her Social Security. HOWEVER, WITHDRAWALS from retirement accounts CAN affect how much of your SS benefits are TAXED once you're collecting them!! Up to 85% of SS can be taxable if your income is high enough in retirement!! So while the rollover doesn't impact your BENEFIT AMOUNT, plan your retirement withdrawals carefully to minimize taxes!!

One thing nobody mentioned yet - the ACTUAL benefit amount from Social Security is based on your highest 35 years of earnings where you paid into the system. So while the 401k rollover doesn't affect anything, your switch from W-2 employment to self-employment COULD affect your future benefit amount depending on how much you earn and report for self-employment tax purposes. If your self-employment income (after expenses) is lower than your previous W-2 income, and you don't already have 35 years of solid earnings, it could slightly reduce your eventual benefit. Just something to be aware of.

wait i thought IRA was better than individual 401k for most people? my brother in law said individual 401ks have more paperwork and fees. did your advisor explain why he recommended that instead?

Thanks to everyone for the helpful responses! This community is amazing. To summarize what I learned: 1. 401k rollovers don't affect SS benefit calculations in any way 2. Social Security only cares about my earnings record where I paid FICA/self-employment tax 3. I need to be careful about self-employment tax reporting to keep building my SS record 4. I'll need to file Form 5500-EZ once my individual 401k exceeds $250k 5. Retirement account withdrawals can affect how my SS benefits are taxed in retirement This gives me a lot more confidence moving forward with my rollover plan. I'll be creating an account on ssa.gov to check my earnings history too. Thanks again!