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I turned 62 on Sept. 22, 2015. I am not collection SS at…

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I turned 62 on Sept...
I turned 62 on Sept. 22, 2015. I am not collection SS at this time. I plan on retiring on February 15, 2016. I will make around $7,500 this month and around another $6,000 in February ( up until the 15th). I will also be receiving approximately $15,000 for sick and vacation time that is owed me, I should be receiving that check in March. My question/s are...when is the earliest I can start collection SS without being penalized ?... can I apply this month before the month ends or do I have to wait until February, March or later. Thank you.
Submitted: 2 years ago.Category: Social Security
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1/24/2016
Social Security Expert: Christopher B, Esq., Attorney replied 2 years ago
Christopher B, Esq.
Category: Social Security
Satisfied Customers: 3,019
Experience: associate attorney
Verified

My name is***** and I will be helping you with your question today. This is for informational purposes only and does not establish an attorney client relationship.

You can start receiving your Social Security benefits at age 62 but it will be subject to the early retirement reduction. The earliest you can start collecting your benefits without penalty is at full retirement age. From the social security website: https://www.ssa.gov/planners/retire/retirechart.html

"If you start your retirement benefits at age 62, your monthly benefit amount is reduced by about 30 percent. The reduction for starting benefits at age 63 is about 25 percent; 64 is about 20 percent; 65 is about 13.3 percent; and 66 is about 6.7 percent."

See the same website to ascertain your exact retirement age is. You can apply for your benefits at anytime, please see for link to apply online: https://secure.ssa.gov/iClaim/rib

Please let me know if you have any further questions and please positively rate my answer as it is the only way I will be compensated for my time by the site.

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Customer reply replied 2 years ago
I know all that, I asked specific questions to my particular situation.
Social Security Expert: Christopher B, Esq., Attorney replied 2 years ago

You can collect full retirement without penalties at age 66 which would be Sept. 22, 2019. You can apply when you turn age 62 which was last year in September. So you can apply for your benefits immediately through the link I provided but again your benefit will be subject to penalty for early retirement. Please let me know if you have any further questions.

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Customer reply replied 2 years ago
I know all that, I want to know about my particular situation, what you are telling me is common knowledge, about being penalized for retiring early...I want to know about being penalized if I retire now because of how much money I have made so far and up until Feb 15, I f you can't understand my questions than I really don't think that you are an expert on SS.
Customer reply replied 2 years ago
I turned 62 on Sept. 22, 2015. I am not collection SS at this time. I plan on retiring on February 15, 2016. I will make around $7,500 this month and around another $6,000 in February ( up until the 15th). I will also be receiving approximately $15,000 for sick and vacation time that is owed me, Ishould be receiving that check in March. My question/s are...when is the earliest I can start collection SS without being penalized ?... can I apply this month before the month ends or do I have to wait until February, March or later. I know about being penalized for not waiting until I'm 66 but I want to know if I have or will have made too much already this year to year.Thank you.
Social Security Expert: Christopher B, Esq., Attorney replied 2 years ago

I'm sorry, your question was a bit unclear up to this point, so let me answer your last question. See link: https://faq.ssa.gov/link/portal/34011/34019/Article/3739/What-happens-if-I-work-and-get-Social-Security-retirement-benefits

"We use the following earnings limits to reduce your benefits: If you are under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2016 that limit is $15,720."

I don't have your income for the year but for the income that you have mentioned. $15,000 + $7,500 + $6,000 = $28,500. So far $12,780 would be above the yearly limit and your benefit would be reduced $6,390 for this year. Each $2 you make for the year 2016, your benefit will be deducted $1.

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Customer reply replied 2 years ago
I'm going to look elsewhere, thanks anyway but I was told that the extra money for sick and vacation time owed does not count. I am going to have to find out for sure.
Social Security Expert: Christopher B, Esq., Attorney replied 2 years ago

Both vacation pay and sick pay are included in your income. See below.

Special rules apply to the reporting of sick pay payments to employees. How these payments are reported depends on whether the payments are made by the employer or a third party, such as an insurance company. Sick pay is usually subject to social security, Medicare, and FUTA taxes. You do report sick pay on your income, here is how:

You may either combine the sick pay with other wages and prepare a single Form W-2 for each employee, or you may prepare separate Forms W-2 for each employee, one reporting sick pay and the other reporting regular wages. A Form W-2 must be prepared even if all of the sick pay is nontaxable (see Box 12 next). All Forms W-2 must be given to the employees by January 31.

The Form W-2 filed for the sick pay must include the employer's name, address, and EIN; the employee's name, address, and SSN; and the following information.

  • Box 1 – The amount of sick pay the employee must include in income.
  • Box 2 – The amount of any federal income tax withheld from the sick pay.
  • Box 3 – The amount of sick pay subject to employee social security tax.
  • Box 4 – The amount of employee social security tax withheld from the sick pay.
  • Box 5 – The amount of sick pay subject to employee Medicare tax.
  • Box 6 – The amount of employee Medicare tax (including Additional Medicare Tax, if applicable) withheld from the sick pay.
  • Box 12 (Code J) – Show any sick pay that was paid by a third-party and wasn't includible in income (and not shown in boxes 1, 3, and 5) because the employee contributed to the sick pay plan. Don't include nontaxable disability payments made directly to a state.
  • Box 13 – Check the "Third-party sick pay" box only if the amounts were paid by a third party.

Under IRS rules, lump sum payments are considered supplemental wages and are subject to Social Security and Medicare taxes even if your maximum contribution limit is greater than your vacation payout. Any federal income tax withheld will be at the IRS supplemental

wage tax rate of 25%.

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Customer reply replied 2 years ago
You are wrong because the sick pay and vacation pay were earned in earlier years....not in 2016 so everything I've read says it does not count.
Social Security Expert: Arthur Rubin, Tax Preparer replied 2 years ago
Arthur Rubin
Arthur Rubin, Tax Preparer
Category: Social Security
Satisfied Customers: 1,679
Experience: Over 20 years experience in tax preparation, including some multi-national Social Security applications.
Verified

The previous expert was correct. Although it is not necessarily the case that earnings subject to Social Security taxes are earnings which effect Social Security payments (before full retirement age), the Social Security FAQ covering your question specifies:

  • When we figure out how much to deduct from your benefits, we count only the wages you make from your job or your net earnings if you're self-employed. We include bonuses, commissions and vacation pay. We don't count pensions, annuities, investment income, interest, veterans or other government or military retirement benefits.

It doesn't specifically mention sick pay, because third-party sick pay is not considered wages if due to an insurance contract paid for by the employee.

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Customer reply replied 2 years ago
I went to the Social Security webs site and there it say that sick pay and vacation pay fall under " special pay' and amd don't count .......I don't accept either of your answers but thanks anyhow.
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