Latest news with #beneficiaries
Forbes
3 hours ago
- Business
- Forbes
Social Security's Annual Earnings Limitation Made Simple
I'll admit, this topic can be confusing. First, let's start with Social Security's definition of full retirement age. Depending on your birth year, full retirement age ranges from age 66 to 67. For our purpose, we will assume a full retirement age of 67. What's important about your full retirement age? The annual earnings limitation only applies if you file for Social Security benefits before you reach your full retirement age. For most people, the earliest you can apply for Social Security retirement benefits is age 62. Therefore, the annual earnings limitation is effective for ages between 62 to 67. At your full retirement age, the annual earnings limitation goes away. Why is that? Social Security considers you fully retired at your 'full retirement age.' Therefore, at your full retirement age, you can make any amount of income, and you will not be subjected to the earnings limitation. If you file for benefits early, between the ages of 62 to 67, you are basically saying to Social Security that you are considering yourself fully retired. Since Social Security does not consider you fully retired because you have not reached your full retirement age, you are allowed to earn wages and/or self-employment income in 2025 up to the amount of $23,400 without being subjected to the annual earnings limitation. If you exceed this amount, you are not considered fully retired and Social Security will apply the annual earnings limitation calculation. The limitation is based on W-2 income and self-employment income only. Any other type of income such as interest, dividends, capital gains, rental income, IRA/401K distributions, etc., is not considered income. The reason it's called the annual earnings limitation is because it is based on the calendar year. If you exceed $23,400 in a calendar year, Social Security will withhold $1 for every $2 you are over the limit. For example, if you made $43,400, you would be $20,000 over the limit, and since it's $1 for $2 ratio, Social Security would withhold $10,000. If you were receiving a monthly benefit that was $1,750, Social Security would withhold 6 months payments since they cannot withhold partial amounts. In the year you reach your full retirement age, in 2025, the limitation is increased from $23,400 to $62,160, and instead of a $1 for $2 ratio, it's a $1 to $3 ratio, meaning for every $3 over $62,160, Social Security will withhold $1. What happens in our situation above where the person retires on June 30? The annual earnings limitation only comes into play when you start collecting Social Security benefits before your full retirement age. So, for example, if you retire at age 65 and that happens to be on June 30, Social Security is not concerned with what you earned prior to July 1. The annual earnings limitation is only applied to earnings after June 30 to your full retirement age of 67. There is a special rule that in the year of retirement, and only in that first year, you can use what's called the monthly limitation, if this is beneficial to you. Remember, we determined that Social Security is not concerned with earnings prior to collecting benefits, so in this situation, earnings from January to June are not considered, only earnings from July to December are what Social Security is concerned about. Instead of using the annual limitation, you can use the monthly limitation in the retirement year only. As long as you do not exceed monthly earnings in excess of $1,950 a month ($23,400/12), the earnings limitation does not apply. If you go over the limitation in any month, the limitation only applies to that month. In the following year, you are then subject to the annual earnings limitation. This exception is generally used by mid-year retirees. What happens if you get paid a bonus, vacation/sick pay, severance pay, back pay etc., in a month after you retire and start collecting benefits? Social Security refers to this as 'Special Payments,' and as long as these earnings were completed before you stopped working, but paid after your retirement date, they do not count towards the limitation. You may have to explain this to Social Security in the future as they are provided with information from the IRS based on your tax return which is annual. What happens if after you start collecting Social Security benefits before your full retirements age you go back to work or know you will be making significantly more than the limitation of $23,400 allows? Obviously, life happens, so you may start to collect Social Security benefits before you reach your full retirement age thinking you are fully retired, and an excellent job offer comes along. Or you get bored and go back to work. You should contact Social Security and let them know you will exceed the annual earnings limitation. They will begin to withhold benefits. You do not want to be in a situation where your Social Security benefits are overpaid because Social Security did not know you are exceeding the annual limit. If this happens, you will need to pay back all of the overpayment in full. The Social Security Administration just issued a new directive on 3/7/2025 to reinstate the overpayment recovery rate to 100% starting on 3/27/2025. This means that if you are overpaid, Social Security will withhold your whole benefit check until the overpayment is recovered. This new directive is only for overpayments received after 3/27/2025. If you already have an overpayment recovery agreement prior to 3/27/2025, that will not be amended. See link for more information: Social Security to Reinstate Overpayment Recovery Rate | SSA Will I lose those benefits because I am subjected to the earnings limitation? No! You will never lose your benefit assuming you live to life expectancy. Many people think that if you exceed the earnings limit you lose your Social Security benefit, and that's not true. You never lose your benefit, it's when they are paid. Social Security uses what's called the adjusted reduction factor to recalculate your benefits when they start again. That's why the term 'withheld' is used. If you are subjected to the earnings limitation, this will ultimately result in a higher monthly benefit payment when payments start again or at the latest when you reach your full retirement age when the earnings limitation does not apply any more. Remember, take the wrong benefit at the wrong time, it's always smaller and forever.
Yahoo
13 hours ago
- Business
- Yahoo
6 Ways To Keep Your Estate Taxes Low
Estate planning isn't the sexiest topic on the planet, but it's worth thinking about as you're deciding how to pass on assets onto your beneficiaries. Sure, you want to ensure that your wishes are honored, making plans on keeping your estate taxes as low as possible. Discover More: Read Next: Fidelity, one of the largest financial institutions in the U.S., suggests that you consider these six factors as you work out how to keep estate taxes low. The first three have to do with how estate taxes could affect your heirs, whereas the others are more directly tied to helping you lower them. Right now, you might not have much to worry if taxable assets in your estate are under $1.399 million if you're single, or $27.98 million for married couples. However, the Tax Cuts and Jobs Act (TCJA), enacted in 2017, is set to expire by the end of 2025. Unless changes are made, the exemption for estate taxes will go down to about half the amount, adjusted annually for inflation. Even if you believe your estate is much smaller than around $5 to $6 million, you never know if by the time you pass away, you'll have that amount. Think about it: After adding up other assets like vehicles and balances in various retirement accounts, your estate could easily get close to or above the tax exemption threshold. Check Out: Your state may have different laws when it comes to your estate. Some may have lower tax exemption thresholds. For example, Iowa, Pennsylvania, Nebraska, and New Jersey have an inheritance tax on all assets inherited by beneficiaries. The amount of inheritance tax paid will depend on their relationship with you. Other states have much lower exemption amounts. Kentucky, for example, is $1,000, whereas Oregon's is $1 million. Even if you're well under the estate tax exemption in your state, it may be higher in the future. Your home value rises over time. If you don't expect to have your heirs inherit your property for decades, the increase in value could bump it up well past those exemptions. It might be a smart idea to take stock of all the assets you plan on giving to your beneficiaries and be aware of how much estate taxes may be taken out. Donating part of your estate to a qualifying nonprofit or charitable organization can help to lower your estate's value, and therefore lowering the amount of estate taxes that may be owed. A common way you can do that now is by opening and contributing to a donor advised fund. The money in the account can be used towards charitable donations. There may be some exemptions as to how much you can contribute to this type of account, and other taxes you may be on the hook for such as capital gains tax. Consult with an accounting or tax professional to help you. A 529 account is a type of investment account where you name a beneficiary and funds can go towards their qualifying educational expenses. Money held in this account is generally not considered part of your estate, as long as it's held there for at least five years. Giving some of your money now to your children or heirs could lower your estate's value, and therefore lower the amount of estate taxes that may be owed. If you go this route, plan out how much you want to give now and how it can affect what you'll need to live on now and during your retirement years. You'll also want to understand how much you can gift before the amount is considered taxable. In 2025, the gift tax exclusion is $19,000, or $38,000 for married couples. More From GOBankingRates Warren Buffett: 10 Things Poor People Waste Money On This article originally appeared on 6 Ways To Keep Your Estate Taxes Low
Yahoo
2 days ago
- Business
- Yahoo
Working While Receiving Social Security: Understanding the Rules
You can work and collect Social Security in many cases, but there are some rules. The Social Security earnings test dictates how your benefits could be withheld. If you've already reached full retirement age, the earnings test doesn't apply. The $23,760 Social Security bonus most retirees completely overlook › Can you work and collect Social Security benefits at the same time? The short answer is yes, but it depends on your personal situation. In some cases, workers who receive retirement benefits, or other types of Social Security benefits, can see some or all of their monthly benefits temporarily go away. That's where the Social Security earnings test comes in. In a nutshell, depending on your age and how much earned income you have, some or all of your Social Security benefits can be withheld. Does the earnings test apply to you? And if it does, what can you expect to happen to your Social Security benefits? Here's a quick rundown of what all working seniors need to know. For the purposes of the Social Security earnings test, beneficiaries who have applied for retirement benefits fit into three categories. Each category has different rules and limitations when it comes to the potential withholding of benefits. So the first step in figuring out how the earnings test could affect you is to determine which category you fall into, expressed as such: You will reach your full Social Security retirement age after. You will reach (or have reached) your full Social Security retirement age during. You reached full retirement age before. If you're in the third category, it's an easy answer: The Social Security earnings test does not apply to you. You can work and earn as much money as possible, and it won't affect your Social Security payments whatsoever. If you're in one of the first two categories, the general idea is that some or all of your Social Security benefits can be withheld if your income exceeds a certain threshold. Here's what I mean. If you will reach your full retirement age after 2025, the earnings test is the most restrictive. You can earn up to $23,400 for the year, or $1,950 per month, with no impact to your benefits. Beyond that, $1 of your Social Security benefits can be withheld for every $2 in earnings. For example, if you earn $30,000 in 2025 and won't reach full retirement age during the year, you will have exceeded the earnings test threshold by $6,600. That means $3,300 would be withheld from your Social Security checks. Finally, if you reach your full retirement age during 2025, the earnings test limit is much higher at $62,160, or $5,180 per month, and only months before your birth month are considered. In other words, if your birthday was April 12, only earnings from January through March are subject to the earnings test. Furthermore, for earnings above the threshold, $1 is withheld for every $3 in excess earnings. First, I want to point out that I deliberately used the word "withheld" when discussing the earnings test limits. If you exceed the earnings test limits and get a lower Social Security benefit as a result, the withheld benefits are not necessarily lost. Once you reach full retirement age, your monthly Social Security payment will be adjusted upward to reflect any withheld money. Second, there's no perfect answer to the question of whether you should claim Social Security while you're still working if the earnings test is likely to affect you. Depending on your financial situation, it could certainly make sense to claim benefits even if some of the money is likely to be withheld. But on the other hand, if you're working and don't necessarily need the extra money, it could make more financial sense to wait. The bottom line is that the Social Security earnings test is a big factor in determining whether older adults who are still working should claim benefits before full retirement age. But it isn't the only factor. It's important to consider your financial situation, family situation, health, and more to decide the best move for you. If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known could help ensure a boost in your retirement income. One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these Motley Fool has a disclosure policy. Working While Receiving Social Security: Understanding the Rules was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNET
3 days ago
- General
- CNET
SSDI June 2025: The Third Round of Payments Is Headed to Recipients
June's SSDI checks are headed to beneficiaries soon. Here's this month's payment schedule. CNET With two rounds down and two to go, Social Security Disability Insurance recipients who haven't been paid yet can expect their payments soon. For the remaining payments of the month, the week you get paid is dependent on the day of the month you were born. We'll explain. The Social Security Administration sends monthly payments to people with disabilities that prevent or limit their ability to work. Depending on their individual situation, others may qualify and can apply for SSDI as well. We'll break down the full SSDI payment schedule for the month of June and how your payment date is calculated so you'll know exactly when you can expect your check. For more, here's what you can do if your last payment never arrived, and here's the Supplemental Security Income payment schedule. If you've had SSDI since May 1997 or earlier, or also receive SSI If you started getting SSDI before May 1997, you'd usually receive your payment on the third day of every month. Note that this isn't always the case, like when the third day falls on a weekend or holiday. For 2025, this will happen in August, so you can expect to receive your payment during that month one to two days earlier. If you also receive Supplemental Security Income, you'll fall into this category. You'll receive your SSDI payment on the third of every month and your SSI payment on the typical day, the first of the month. For everyone else, payments are birth date-dependent If you began receiving SSDI after May 1997 and don't also receive SSI, then your payment date is determined by the day of the month you were born. Payments are typically paid out on the second, third and fourth Wednesday of the month. Which Wednesday you get your check breaks down like this: Birthdate between Social Security check date 1st and 10th of the month Second Wednesday of the month 11th and 20th of the month Third Wednesday of the month 21st and 31st of the month Fourth Wednesday of the month Here's when you'll get your SSDI payment in June Here's when your SSDI payment should arrive this month: If you've received Social Security before May 1997 June 3 If your birthday falls between day 1 and 10 of the month June 11 If your birthday falls between day 11 and 20 of the month June 18 If your birthday falls between day 21 and 31 of the month June 25 How does 2025 COLA affect my payment? The COLA for 2025 introduced a 2.5% increase in monthly benefit checks, but exactly how much of an increase will depend on several factors. Any monthly income, how long you've received benefits and what type of benefit you receive can result in a different payment increase. Recipients should have received their COLA notice sometime in December with specific details on their case. A COLA of 2.5% will add about $48 to the average benefits check. For more, don't miss four ways you could lose your Social Security benefits and how to apply for SSI.
Times of Oman
5 days ago
- Business
- Times of Oman
Telecommunications Regulatory Authority issues bylaw on regulating retail tariffs
Muscat: The Telecommunications Regulatory Authority (TRA) has issued a bylaw on price control titled 'Retail Tariff Regulation' that repeals the regulation issued vide Decision No. 27/2016. The new bylaw comprises several regulatory provisions, including general provisions on retail tariffs for telecommunications services, special provisions for tenders offered to commercial beneficiaries and government institutions, and additional regulatory provisions on monitoring pricing practices that may exceed certain levels. The regulation targets all licensees who provide public telecommunications services in retail markets. The new bylaw seeks to keep pace with regional and international updates in the telecommunications sector. It also seeks to promote fair competition and ensure transparency in the retail telecommunications services market, while at the same time safeguarding the rights and choices of beneficiaries.
