Will an IRA withdrawal affect Social Security benefits?

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Q. My husband retired at 65. He has a 401(k) that he transferred to an IRA. He’s only allowed to make so much money since he’s 65 while he’s getting Social Security. If we withdraw money from his IRA, will that count against his income from Social Security?
— Curious

A. Congratulations on your husband’s retirement.

There are a few things to understand here, and it includes some good news for you.

First, Social Security gives us the opportunity to retire younger than our full retirement age and still make money, said Betty Thomas, a chartered financial consultant and certified financial planner with Peapack Private Wealth Management in New Providence.

The earnings limit if you are under full retirement age is $19,560 for 2022, she said. If you earn over the limit, then Social Security will deduct $1 from your benefit for every $2 earned over the annual limit.

If you are in the year you’ll reach full retirement age, the limit on earnings is $51,960, she said. If you exceed the limit the deduction would be $1 in for every $3 earned above the limit.

“The good news is Social Security defines `earned income’ as wages from job or net earnings from self-employment,” Thomas said. “If he is withdrawing money from his IRA, it does not count towards the earnings limit.”

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This story was originally published on July 23, 2022.

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