TP received notice of excess earnings for early retirement and notice of repayment. It has been my understanding that earnings PRIOR to the application and receipt of Social Security benefits are not considered in the maximum one can earn and not have to pay anything back. And that it is calculated by month. So if a person retires in July 2010 at ages 62-65 and worked a half-year prior to attaining this age, then received SSA for the last half, are those earnings taken into consideration of the max amt allowed? SSA says no, and TP has been instructed to complete Form 131. But this form is for earnings in a prior year and credited in the retirement year. He has to get it from 5 employers.
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Special rule for the first year you retire
I believe you are correct - this is from the SSA Website "How Work Affects Your Benefits"
"Sometimes people who retire in mid-year already have earned more than the yearly earnings limit. That is why there is a special rule that applies to earnings for one year, usually the first year of retirement. Under this rule, you can get a full Social Security check for any whole month you are retired, regardless of your yearly earnings."
See:
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Is there a local office he can go to and speak with someone face to face. I had a client a couple years ago that received wages in January and then a large sum of vacation pay. He was required to pay back part of his social security and I told him I was sure this was incorrect. He couldn't get anywhere over the phone and finally went to an office - sure enough they were wrong and he received the monies they held as repayment back.Comment
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Use the SSA web site
The SSA web site is quite good for explaining these issues.
In a nutshell, there is a unique set of rules for the one year in which a person reaches full retirement age.
Anything earned after the birthday is not considered for any "excess earnings" issue. That's the easy part.
But anything earned from Jan 1st to the birthday has a specific set of calculations involved, and the recipient could have to repay some benefits received.
Enjoy: http://www.ssa.gov/retire2/whileworking3.htm
FEComment
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Yes, I know. I actually printed that information out and gave it to the TP who called SSA and they verified that it is correct. However, they said he had to prove it and would not accept his paystubs. (He has them all). This seems ridiculous since the stubs can substantiate dates and amounts. They told him to file Form 131 from EACH employer. This form doesn't say anything about this situation. It concerns prior year earnings.Originally posted by mactoolsix View PostComment
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A bit of confusion here
I went back and read Burke's original post. There is some confusion there...at least for me.
For a person who has not attained full retirement age, the "excess earnings" issue is always out there. Let's assume a person applies for Soc Sec benefits (and is age 63 at the time) in the month of June and the first payment is received in October. Everything that is earned/Sch C from Jan 1 to Dec 31 of that year could create excess earnings that would lead to potential paybacks. Same for the next year (age 64). And same until the year/time the person reaches full retirement age.
As mentioned elsewhere, there is a different (and unique) set of rules for the single year in which a person attains full retirement age. BUT once that magic date has passed, anything that is earned after that date will have zero effect on reducing any otherwise-eligible benefits.
Further reading of this thread would seem to indicate the discussion may be about underlying benefits (which can increase) from post-age 62 employment and NOT any reduction in benefits for having earned too much. Social Security benefits from employment are always subject to change if a person continues to work, even into "old age."
FEComment
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I understand your point. But if you go back and re-read the SSA cite mentioned in this thread, it says nothing about being any particular age. It says "... special rule for earnings for one year, usually in the first year of retirement." It does not say after you reach full retirement age. In my case, the TP, at age 63, worked until June, then retired and applied for and received SS benefits for Sept-Dec. He did not work at all after June.
(I was not referring to the increase in benefits issue you mentioned. Sorry if that was not clear.)Last edited by Burke; 02-12-2011, 05:22 PM.Comment
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Another poor choice of words, perhaps
I think you are reading WAY too much into the "usually in the first year" phrase. In Soc Sec double-speak, they probably are assuming everyone waits until full retirement age to retire. That is obviously not the case, as many folks now retire "early" and therefore take reduced Soc Sec benefits for the remainder of their life. They therefore have that issue of "making too much" facing them until they DO reach full retirement age.Originally posted by Burke View Post
I can, however, offer for you a real world example: A close friend (not a client) started drawing Soc Sec benefits around Sept of 200X, and was age 62 at the time (wished to claim benefits as early as possible). From Jan through Aug this person received $10k in wages from a part-time job. From Sep through Dec, another $5k. (Total of $15k for the year, but only $5k after benefits started.) My friend was quite surprised, sometime later, to receive a letter from the Soc Sec folks stating that for year 200X the wage limit had been exceeded, and they would reclaim some of his already paid benefits from year 200X via reductions in upcoming monthly payments. (And the friend also decided to work a little "less" until full retirement age of 66 is attained.)
Certainly I do not espouse to know how things work within the crazy world of the SSA. The only way to get a firm answer on this issue is to talk specifically with a Soc Sec person, and perhaps get something in writing.
You may also wish to look around here: http://www.ssa.gov/pubs/10003.html
I'm sure you can share with us the final outcome.
FEComment
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my husband and I both retired at age 62 from full time jobs. husband stopped working in april and we had to submit letter from employer of total income for hours worked as well as the vacation pay to prove the income up to the april retire date, in order to exclude that income. he did not work at all after april.Comment
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Funny, the TP did just exactly that, and the person confirmed that what we thought was correct. That's when she asked the TP to send in the documentation. I will update when final decision has been made. In the meantime, they have put a hold on the reclaiming of overpaid benefit.Originally posted by FEDUKE404 View PostComment
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But could it be that exclusion of the vacation pay dropped him down below the max earnings for that year? In my case, there is no vacation or accumulated sick pay involved.Originally posted by taxmom34 View PostComment
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Different issue?
This seems to be a separate issue.Originally posted by taxmom34 View Post
Exactly what were you "excluding" it from??
Did you and/or your husband face the potential of "too much" income during that year, obviously being younger than full retirement age, or instead wanted your Jan through April income included in your initial Soc Sec benefits determination?
FEComment
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[QUOTE=Burke;113719 It has been my understanding that earnings PRIOR to the application and receipt of Social Security benefits are not considered in the maximum one can earn and not have to pay anything back. [/QUOTE]
Correct........Comment
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