Do withdrawals from my IRA affect Social Security benefits?

If you withdraw money from a traditional IRA, it won't affect your ability to claim and collect Social Security benefits. However, a traditional IRA distribution is considered taxable income, so it can result in some of your Social Security benefits being subject to income tax.

Is withdrawal from an IRA considered earned income?

IRA withdrawals can be considered taxable income, but they are not considered earned income. Earned income is money you receive from a job, as an independent contractor for work you perform, or from a business you actively participate in.

What income counts toward Social Security earnings limit?

The Social Security earnings test considers only earned income, which includes salary, wages, tips, bonuses or other compensation from a job, money paid to you as an independent contractor for work you perform, or money you earn from a business you actively participate in.

Do IRA withdrawals count as income for Medicare?

Yes, traditional IRA withdrawals typically count as income for the purpose of calculating Medicare premiums. If your income is greater than a certain level, your Medicare Part B or Part D premiums can be higher.

What income does not count against Social Security?

Roth IRA distributions have no effect on Social Security benefits, including the earnings test or taxation of benefits. Any unearned income, such as interest or dividends, doesn't affect your ability to collect Social Security, but it can make more of your benefits taxable.

Does an IRA Distribution Count as Income for Social Security?

Does IRA Distribution Count as Income for Social Security?

Key Points

IRA distributions are not considered earned income for the Social Security earnings test.
Traditional IRA distributions increase AGI, which could cause up to 85% of your Social Security to be taxable.
Roth IRA distributions do not affect Social Security taxability or benefits eligibility.

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An infographic explaining whether IRA distributions count as income for Social Security. — Image source: The Motley Fool.

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Adjusted Gross Income (AGI)

An amount that takes your total, or gross income, and makes certain adjustments to determine your income for certain tax break qualifications.

So, if your AGI is $25,000, you have $5,000 in nontaxable interest, and you have $30,000 in Social Security benefits, your combined income for the year is $45,000.

If your combined income exceeds certain thresholds, as much as 85% of your Social Security benefits can be taxable. The general idea is that if Social Security is your primary source of income, you won't likely have to pay tax on it, but retirees who get significant income from other sources can be taxed.

When it comes to IRA distributions, here's how it works:

Roth IRA distributions are not included in your combined income, so they have no impact on whether your Social Security is taxable.
Traditional IRA distributions are generally included in your AGI, so they are included in your combined income.

This means traditional IRA distributions can make some of your Social Security benefits taxable.

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IRA distributions FAQ

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About the Author

Robin Hartill, CFP, is a contributing writer at The Motley Fool. Robin’s work has also been published by Yahoo Finance, USA Today, and Penny Hoarder. She is a graduate of the University of Florida.

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