Are taxable withdrawals from my 401k considered earned income?

Published: August 1, 2022

Full question: Are withdrawals from my 401k considered “earned income” with respect to taxing my Social Security benefits? I understand how Social Security benefits can be taxed if you have earned income while collecting Social Security. I just don’t understand/know if taxable withdrawals from my 401k count as earned income. Thanks.

Hi there,

The earnings test applies if you are collecting Social Security benefits and you also have earned income, between the ages of 62 and full retirement age, FRA. Withdrawals from a 401k are not earned income and therefore will have no impact on the amount of Social Security you collect during those years.

If you are asking about income taxation of Social Security benefits, then yes, withdrawals from your 401k are certainly taken into consideration. Up to 85% of your Social Security benefits can be subject to federal income tax. The amount that is subject to taxation, and the amount actually taxed, is determined by a series of calculations. It depends on the amounts of your adjusted gross income, Social Security income (only 50% is used in the calculation) and any tax-exempt interest. Also, depending on the state you are in, you could be subject to state income tax on your benefits as well.

I recommend that you consult with a tax professional to help you with these details.

Best of luck,

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