72t distributions and S.S. benifits

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L1: 72t distributions and S.S. benifitsHello all….I’m considering starting a SEPP per IRS 72t minimum distribution formula, but I really would like to know how Social Security admin. views the payments, etc.Do the payments constitute “earned income” in the eyes of S.S. and will this increase my S.S. benefit when I start to collect at age 63 (5 yrs. from today)? Being semi-retired (school bus driver) I only gross approx. 23k, and figured the additional 17 k from the SEPP could help improve my standing with Social Security. Any advice or suggestions would be greatly appreciated. Shark2009-12-11 15:43, By: Shark, IP: []
L2: 72t distributions and S.S. benifitsDistributions are not considered earned income and are therefore not subject to the SS tax nor will they increase your SS benefits.2009-12-11 15:55, By: Gfw, IP: []

L3: 72t distributions and S.S. benifitsThis will not increase your SS benefit, and could result in taxation of your SS retirement checks if your 72t plan is still in place when you begin collecting SS. When SS income is being added to your taxable income, a marginal tax rate of 15% can become as high as 27.75%, something you should try to avoid unless you have other income sources that already will result in 85% of your SS being included in taxable income.If you are turning 58 now, you only have 18 months to go for the early withdrawal penalty to disappear, so you probably should not start a plan if you can avoid it, because you will have to maintain the plan for 5 years.But if you must start a 72t plan now, perhaps you can delay filing for SS retirement benefits until after the plan ends or your part time work ends. 2009-12-11 18:29, By: Alan S., IP: []