Will be 72 in Feb, 2023 and I’ve requested a lump sum payout for pension, commencement January 1, 2023, due to the rules of turning 72. In reading different article updates for 2023, (Secure Act 2.0) it looks like 401Ks, IRAs, pensions, etc., has been extended to 73yrs of age. To be honest, I had no idea that 401K, pension, etc., has age limits and thought I could cash out in my much older age for living care. Yes, I know, very ignorant!
SS 30,000 annual/ Pension 300,00 lump sum
Concerns and questions are:
1) Will or would taking the lump sum of my pension effect my monthly Soc Sec payout, including paying more for Medicare A&B ?
2) Should I or can I delay/stop my Soc Sec for one year for 2023 to avoid paying more taxes and receiving less Soc Sec and paying more for Medicare??
3) And will I be able to restart my Soc Sec Medicare back up in 2024?
4) I’ve read so many different articles and one of them mentioned that once you cash out a retirement fund, that only affects Soc Sec monthly payout for one year and then you go back to your initial amount before the cash out, but in reading one of your articles, you had wrote that it may be years before getting back to your Soc Sec initial was…? Which is correct? Please forgive me if I read your article incorrectly. I could be so so wrong in reading both articles.
Please know how thankful I am to you for sharing your knowledge.
Please feel free to delete anything above you deem necessary.
Hi. Receiving a lump sum pension payment won't affect your Social Security benefit amount assuming that you didn't work for an employer that was exempt from withholding U.S. Social Security taxes. It probably will raise your Part B Medicare premium rate, though, at least for one calendar year. Part B premium rates are adjusted annually based on a Modified Adjusted Gross Income (MAGI). Therefore, any Part B premium increase that results from a spike in your MAGI won't last for more than a year assuming that your MAGI drops back down in the following year. For more information on income-related Part B premium adjustments and exceptions, refer to the instructions on the following Social Security form: https://www.ssa.gov/forms/ssa-44-ext.pdf.
You can elect to waive your Social Security benefit payments and then withdraw the waiver request when you want to resume receiving your benefits (https://secure.ssa.gov/apps10/poms.nsf/lnx/0202409001). My expertise is limited to Social Security benefits, though, so I can't tell you how that might affect your taxes nor can I tell you whether or not it may be advisable. There's no specific form to use to request waiver of benefit payments should you choose to opt for that, but you could use a form SSA-795 (https://www.ssa.gov/forms/ssa-795.pdf).
There is no premium charge for Part A of Medicare if you receive Social Security benefits. That's true even if you waive the receipt of benefits. You could drop your Part B coverage (https://www.medicare.gov/basics/get-started-with-medicare/sign-up/ready-...), but then you'll have to pay out of pocket for any medical bills that Part B would have covered. Also, although you can re-enroll in Part B during the annual general enrollment periods (GEP) that last from January through March, your Part B coverage doesn't resume until July 1st of the year that you re-enroll. Furthermore, if and when you resume your Part B coverage a 10% premium surcharge would be applied for each 12 gap in your coverage. Therefore, dropping Part B coverage is usually not advisable for most people.
It sounds like you may want to consider signing up for our Maxifi planner software, or you may want to consult with a financial and/or tax expert for advice. For more information on Maxifi, you can go to the following website: https://maxifiplanner.com/.
Best, Jerry
