@jfcoberly1 wrote:
I want to max out my 401 contributions to offset a high tax debt if I apply for my SS now while I am still working. I can't afford to catch-up without it. My SS is smaller than my survivors benefits at 67 I would be retired then and would change to his SS.
I just want to be sure my maxed out 401 contributions would LOWER my tax debt so all my Social Security wouldn't be taxed away.
If you take your retirement benefit before your "full retirement age" and keep working, your benefit will be reduced. For purposes of this calculation, social security uses your gross wages before retirement contributions. That means that, if you take your benefit and keep working, your benefit will be reduced by the same amount no matter how much you contribute to the 401k.
Separately, increasing your 401k contribution will reduce your income subject to income tax. It will not pay off a previous tax debt, but it will reduce the amount of income tax you owe for the year of the contribution. However, the reduction is only about 1 in 4 or 1 in 5. For every $1000 you contribute, your income tax will go down by about $220. But you have removed all that money from your take-home pay, and can't access it until you retire.
In other words, the 401k will still reduce your current year taxable income, like any contribution always will. But increasing your 401k will not stop your SS benefit from being reduced.
https://www.ssa.gov/benefits/retirement/planner/whileworking.html
