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cleaningcleaning
New Member

Does income taken out of my 401k for the last 2 years show up as income on my social security statement and it has been reported on my taxes as income?

 
4 Replies
VolvoGirl
Level 15

Does income taken out of my 401k for the last 2 years show up as income on my social security statement and it has been reported on my taxes as income?

Are you currently receiving SS Benefits?  Yes if you increase your income they will increase your Medicare premium deduction the next year.  

Critter
Level 15

Does income taken out of my 401k for the last 2 years show up as income on my social security statement and it has been reported on my taxes as income?

Look at your W2 box 3 ... those are the SS wages that SS uses for your annual report.  

fanfare
Level 15

Does income taken out of my 401k for the last 2 years show up as income on my social security statement and it has been reported on my taxes as income?

to answer your questions:

1) 401k distribution is not considered wage income by Social Security administration.

 

2) 401k distribution is considered income by IRS and will be on your tax return if you filed a correct tax return.

BUT, if you took a loan against your 401k, a loan is not income and is not on your tax return.

Hal_Al
Level 15

Does income taken out of my 401k for the last 2 years show up as income on my social security statement and it has been reported on my taxes as income?

Q. Does income taken out of my 401k for the last 2 years show up as income on my social security statement?

A. No

 

There are 3 ways other income  might affect your social security benefits:

  1. Prior to full retirement age, additional earned income may reduce your social security benefit.  Retirement distributions are not considered earned income.  You benefit will not be reduced because you took a 401k distribution.
  2. Higher income people (>$85K single ; >$170K married) pay a bigger medicare premiums.  The higher premium will automatically be taken out of your SS benefit, later, if your  401k distribution pushes into that range. 
  3. Social security only becomes taxable when added to sufficient other income. By taking a 401k distribution, more of your SS benefit may become taxable. This is handled on your tax return, not your SS statement. If you are otherwise required to file a tax return, you do need to enter your SSA-1099 in Turbotax (TT). TT will determine the taxable portion.  

    After TurboTax (TT) calculates the taxable portion of SS, it puts the total amount of SS on line 5a of form 1040 and the taxable amount on line 5b (lines 20a & 20b in 2017). TT also produces a worksheet  to show how the taxable amount is calculated. Although most people pay tax on 85% of their SS. it can be less for lower income taxpayers.

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On the other hand, if you are asking will your social security benefits increase based on the additional income you've been taxed on; the answer is still no.  Retirement distributions, including 401k, are not earned income (wages or self employment) for purposes of social security benefits. 

 

Note that even though you have pad income tax on the 401k distribution, you did not pay any FICA (social security and medicare) tax on that income.

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