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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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If I am receiving my social security payments now at age 62,

Customer Question

If I am receiving my social security payments now at age 62, can I continue to participant in my companies 401k plan? Does my personal deferrals effect my social security payments?
Submitted: 8 months ago.
Category: Tax
Expert:  Lev replied 8 months ago.
You may continue to participate in 401k plan at your work.That is not based on age and doesn't related to your social security benefits.As long as you are working and receive compensation - you would be eligible to have elective deferrals from wages and continue contributions into 401k plan.Individual elective deferrals will NOT have any effect on social security benefits.However - because you are below your full retirement age - your earnings - wages and/or self-employment income are limited.If your earning is above the limit - your social security benefits will be reduced.Your elective deferrals will NOT reduce your earning for social security purposes - if that is your concern.Your earnings for social security purposes is reported on W2 box 3. Questions?
Expert:  Lev replied 8 months ago.
An installment sale is a sale of property where you will receive at least one payment after the tax year in which the sale occurs. You are required to report gain on an installment sale under the installment method unless you "elect out" on or before the due date for filing your tax return (including extensions) for the year of the sale. You may elect out by reporting all the gain as income in the year of the sale on Form 4797, Sales of Business PropertyIf you do not elect out - under the installment method, you include in income each year only part of the gain you receive, or are considered to have received. You do not include in income the part of the payment that is a return of your basis in the property. Use Form 6252 , Installment Sale Income, to report an installment sale in the year the sale occurs and for each year you receive an installment payment. You will need to file Form 1040 , U.S. Individual Income Tax Return, and may need to attach Form 4797 , Sales of Business Property.You must also include in income any interest as ordinary income.Questions?
Expert:  Lev replied 8 months ago.
Please ignore last post - it was posted by mistake.
Expert:  Lev replied 8 months ago.
You may continue to participate in 401k plan at your work.That is not based on age and doesn't related to your social security benefits.As long as you are working and receive compensation - you would be eligible to have elective deferrals from wages and continue contributions into 401k plan.Individual elective deferrals will NOT have any effect on social security benefits.However - because you are below your full retirement age - your earnings - wages and/or self-employment income are limited.If your earning is above the limit - your social security benefits will be reduced.Your elective deferrals will NOT reduce your earning for social security purposes - if that is your concern.Your earnings for social security purposes is reported on W2 box 3...I appreciate if you take a moment to rate the answer.Experts are ONLY credited when answers are rated positively.If you still have any doubts, need clarification - please be sure to ask.I am here to help you with all tax related issues.

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