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Arthur Rubin
Arthur Rubin, Tax Preparer
Category: Social Security
Satisfied Customers: 1561
Experience:  Over 20 years experience in tax preparation, including some multi-national Social Security applications.
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Born 1940. Retired from government with 32 years civil

Customer Question

Born 1940. Retired from government with 32 years civil Service; switched from Civil Service to FERS and worked 5 years, making me eligible for SS, end of Dec 2003. Retired Dec 2003. Filed for SS the following year. Was not informed by SScty that I would have full eligibility if I waited one more year. I guess they don't volunteer helpful information that would be advantageous to applicants..
A week ago I received a letter from Social Security Specialist that my Social Security Benefits was being reduced by almost $100 because of an increase in income, etc. I went to the SS Office and told the Specialist that I had not worked since I retired in 2003 and that the increase they were referring to was part of my 401K (IRA) (not Government Thrift Savings which I understand is akin to a 403K)). I told her I had to withdraw the money to help my handicap son as he was was not eligible for disability or any other health insurance. The specialist insisted it was "income." and said I could appeal it, She sent me a booklet on Social Security - What you Need to Know when you Get Retirement or Survivors Benefits. There is nothing mentioned about 401K or annuities being considered as Earned or Unearned Income.
Can you help or do I need to get a Social Security Lawyer here in San Antonio, TX.
Thank you.
Submitted: 1 year ago.
Category: Social Security
Expert:  Phillips Esq. replied 1 year ago.

Regrettably, the money from your IRA is a countable income and can therefore reduce the amount of your benefits. It is specifically classified as an "unearned income."

Expert:  Arthur Rubin replied 1 year ago.

As per Phillips Esq., IRA income is specifically classified as unearned income. However, the only types of income which affect retirement benefits are earned income (which can reduce benefits before your "normal retirement age") and income from pensions from work not covered by Social Security.

Unearned income can effect SSI (Supplemental Security Income), but you seemed to say that you weren't getting that.