Q. With the Social Security supplement for FERS employees, I know there is an income limit at which this phases out. Is this income limit based on what you actual earn, or is it taxable income? For example, could I work and earn $20,000 and put that into my 401(k) plan, thus giving me no taxable income for the year, and still get my Social Security supplement up to age 62?
A. No, you can’t. According to OPM: “If a retiree’s earnings exceed the exempt amount, the annual supplement will be reduced $1 for every $2 that is earned above that amount. Earnings, for purposes of calculating the earnings reduction, consist of the sum of wages for services performed in the year, plus all net earnings from self-employment for the year, minus any net loss from self-employment for the year. (See 42 U.S.C. 403.)”
7 Comments
What is the Income limit that a FERS employee’s Social Security supplement will not be reduce?
$15,720. See the Social Security Website at https://www.ssa.gov/pubs/EN-05-10069.pdf
Thank you.
Does that limit include money from TSP withdrawls?
No, it doesn’t. It only includes earnings from wages and self employment.
I am looking at cashing in stocks I have. Would this affect my earning amount for the year if I exceed the $15,700
No, it wouldn’t. That’s because the Social Security limit only applies to earnings from wages or self employment, not to other sources of income.