[Susan Chambers]

I am on widow benefits for social security and I will be eligible for my benefits when I
Turn 66 next year. I have to pay $1.00 for every $2.00 I earn over the amount of
$13,400.00 for 2008. If I withdraw money from my 401 K, will that be considered
Income for this year where I would have to pay $1.00 for every $2.00.

I have had two different answers from Social Secuity on this matter - one -yes
One -no.

[ebaines]

In determining how much (if any) of your social security is taxable, you compare the total of your social security benefits plus your "modified adjusted gross income" (which is essentially your AGI plus any tax-free interest received) against a base amount for your filing status - if the total is greater than the base, then some of your social security is taxed. Assuming you file as single, the base amount is $25K. So if your modified AGI plus SS income is greater that $25K, up to 50% of your SS income will be taxed.

In determining your modified AGI you include virtually all sources of income, including wages, interest, dividends, pensions, capital gains, etc - so yes, your 401(k) withdrawals will contribute to the determination of how much of your SS benefits will be taxed.

You should read IRS Pub 915 for details: http://www.irs.gov/pub/irs-pdf/p915.pdf

You may want to consider delaying your SS benefits, seeing as how you have wages and will be making a 401(k) withdrawal. The longer you delay the larger your checks will be. If you feel you're in pretty reasonably good health, this may benefit you in the long run.

[smearcase]

I don't believe the 401 k is considered earned income and would not reuire paying back SS benefits as is required for earning over the max. amount. But I am not an expert on the subject.

The attached ss site and others should clarify it:
When you work and get Social Security at the same time