I plan to retire at age 55, next year. I want to live on my IRA distribution and at 62 take early social security. ( I realize I can take a fixed monthly amount prior to age 59.5, as long as I take it for 5 years).

I read that social security wages are limited until complete retirement, which for me is 66.5.

My question is: During the years when I am 62 - 66.5, does my IRA distribution count as social security wages?

Thank You!

Were your contributions to your IRA pre-tax or post-tax? If they were pre-tax (i.e. tax sheltered), then the distributions will count as "income" and carry the appropriate tax liability. But if the deposits were not tax-sheltered, then no, since you would have already paid the applicable tax at the time your earned the money, prior to depositing it in your IRA. Of course, any interest your IRA accrues is "income" and will be taxed accordingly. Retiring early, such as at age 55, and making withdrawals at that time, will carry a heavier tax liability than if you wait until you're older.

To answer your question, regardless of whether the IRA was traditional (pre-tax) or Roth (post-tax) in terms of the contribution, the Social Security taxes were already paid, so the distribution from the IRS is NOT subject to Social Security or Medicare taxes.

Hello Shengels. I assume you are asking whether your IRA withdrawal will cause a decrease in your SS payout, like earned income does - is that right? The answer is "no" - IRA withdrawals are not considered to be earned income wages, and hence do not limit your SS payout. Also, if you are asking whether you have to pay SS tax on the IRA withdrawal - again the answer is "no." Of course you will have some income tax liability, but I suspect that you already knew that.

ebaines:

Good catch on the SS payout offset issue; I did not consider that.

I am 66 and filed for ss last year. I also work and earn about 31,000 a year. I also withdraw money from my ira that was a retirement Non taxed when I withdrew it. I pay income tax on what I take out. My question is how does this affect my ss. Does the 21,000 I took out as withdrawals go against my income and count against my ss. Will I have to pay income tax on the amount that is over the 25,000. Base.

The IRA withdrawal gets taxed as income, but it does NOT offset your SS benefits like the $31K salary.