Retirement Flashcards
Employment categories NOT covered by Social Security
- Railroad employees
- A child, under age 18, employed by a parent in an unincorporated business
- Ministers etc who claim an exemption
- Members of tribal councils (native Americans)
- Student nurses working for a college or college club
Worker benefits for Social Security
- A retired fully insured worker age 62 is entitled to retirement benefits
- A worker is entitled to DISABILITY benefits if they are UNDER 62 & has been disabled for 12 months, is expected to be disabled for at least 12 months, or has a disability expected to result in death. ***Has a 5-month waiting period
Currently insured workers
(6 quarters of coverage) are eligible for
- Lump sum death benefit of $255 for spouse OR dependent
- A surviving spouse’s benefit (if children are under 16)
- A dependent benefit
Spouse Benefits
Spouse of a retired or disabled worker qualifies for SS payments if they meet ANY of these requirements:
1. Is age 62
2. Has a child under age 16
3. Has a child age 16 and over & disabled before age 22
Surviving Spouse (including a survived divorced spouse)
- Surviving spouse of a deceased insured worker qualifies for payments if the widow(er) is 60 or over
- Surviving spouse can claim payments at any age if caring for a child of the deceased* who is 16 or became disabled before 22*
Divorced Spouse
- Must have been married to the worker for at least 10 years & generally not remarried (been divorced for 2 yrs)
- Must be at least 62
- Can claim even if worker hasn’t claimed benefits
Dependent benefits
A surviving dependent, unmarried child of a deceased, disabled or retired insured worker qualifies if:
* Under 19 and a full-time elementary or secondary school student
* Age 18 or over but has a disability which began before age 22
Lump-sum benefit
$255 for
* Spouse living in the same household as the deceased at the time of death
* Dependent child
***Only 1 can get it, not both
Taking SS BEFORE FRA
Primary insurance amount (PIA) is reduced
PIA - [ #of months before FRA/180] X PIA
This gives the reduced amount.
$1000 - [24/180] X $1000 = $133.33
So payment would be $866.67
*Calculation only works up to 36 months early
Working after Retirement
- Younger than FRA gov’t deducts $1 for every $2 earned above $21,240
- Reach FRA during 2023 gov’t deducts $1 from benefits for every $3 earned above $56,520
Taxation of benefits
50%
If a person’s income plus 1/2 of their SS benes is more than $25,000 single & $32,000 MFJ then 50% of the ss benes will be taxed
*Muni bond interest counts as income
Taxation of benefits
85%
If a person’s income plus 1/2 of their SS benes is more than $34,000 single & $44,000 MFJ then 50% of the ss benes will be taxed
*Muni bond interest counts as income
Defined Benefit Pension
Qualified plan/ERISA/PBGC
* Favors older employee/owner (age 50+)
* Guaranteed retirement benefit amount
* Requires very stable cash flow
* Past service credits allowed
* Spouse determines beneficiary
DB Max Contribution - Stuff it like a PIG
Cash Balance Plan
Qualified plan/ERISA
* A pension type of DB plan - *PBGC
* *Employer guarantees not only contribution level but also a minimum rate of return on each participant’s acct
* May allow for past service credits
* Spouse determines beneficiary
Money Purchase
Qualified plan/ERISA
DC - Pension plan
1. Up to 25% employer deduction
2. Fixed contributions
3. Stable cash flow needed
Only first $330k of salary can be taken into account
Max contribution $66k ($73,500 if age 50+)
No salary deferral
No company match (bc no deferral)
Yes company plan
Yes forfeitures
