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Question for the Money Doctors

Question submitted on Apr 16, 2012.

Question

Thank you for applying to my question about tax deferred income pension income not affecting my Social Security. I did understand your reply but I want to be sure my question was clear. I have applied for my benefits and plan to adjust my paycheck by depositing money into my 403b to keep my W2 reported income below the 14,160 p/yr. I will not draw out the pension income until I am at full retire age.

Answer

Thank you for clarifying your question.  Your employee contributions to a cash or deferred pension or retirement plan continue to be counted as "Social Security wages", and will therefore be counted in the Social Security earnings test.  You cannot adjust your income below the 2012 $14,640 Social Security earnings limit through tax deferred retirement contributions.


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